Trend Of Chinese IPOs In US Markets Continues This Year

Nasdaq Market site in New York
A podium is seen in the client experience space at the Nasdaq Market site in New York, U.S., May 2, 2019.
(Photo: REUTERS/Brendan McDermid)

The number of Chinese companies who are choosing to go public in the United States is reportedly now increasing. According to the finance market insiders, the trend is growing in popularity as Chinese firms are witnessing an increasing demand from global investors.

According to NASDAQ's Listing Services senior vice president, Robert McCooey, China and the United States apparently both have the same type of "entrepreneurial vision." The executive further states that businesses in major cities such as Beijing, Guangzhou, and Shanghai are basically doing the same things as firms in Silicon Valley or in New York City.

The similarities have attracted major Chinese firms such as iQiyi, Bilibili, Pinduoduo, and Uxin. These companies are currently listed in the United States, after going public in the western country last year. The United State's broader international investor base and it's high liquidity have made it a go-to destination for Chinese firms who are looking to raise significant capital.

So far this year, 12 Chinese firms have been listed on NASDAQ, with three companies scheduled to officially go public this week. Last year, 48 Chinese firms went public in the United States. This was a significant increase from the 24 firms in 2017 and 10 firms in 2016. If the trend continues, NASDAQ should be seeing even more Chinese firms on their list this year.

Chinese companies listed in US stock exchanges have also been performing quite well. There are currently a good number of Chinese firms that are part of the 100 largest companies on NASDAQ. This includes companies such as Jing Dong, Ctrip, NetEase, and Baidu. McCooey mentioned that he hopes to see more Chinese firms on the NASDAQ-100 index in the coming years.

Some of China's biggest tech IPOs last year were on NASDAQ, with video streaming firm iQiyi leading the pack by raising more than US$2.25 billion. Chinese e-commerce firm Pindoudou also performed very well by raising more than US$1.62 billion in its US IPO.

Chinese financial consulting firm, ATIF Holdings Limited, mentioned that it expects its business to significantly increase as more Chinese firms go public in the US stock market. According to the company's CEO, Wang Quili, Chinese IPOs should still continue to be hot for investors given that the US capital market boasts 50 percent of the global investment funds. Wang further stated that 60 percent of global trading volumes are on US markets.

Wang cited Pindoudou as a great example of a Chinese firm's IPO performing very well in the United States. As China's economic development continues and its macro business environment improves, global investors will be getting more opportunities to ride the wave as markets now become more globally available.

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