The wave of Chinese enterprises listed in the US suddenly stopped
Stocks after the US listing were not very positive, the stock market declined, damaging investor confidence, causing Chinese businesses to falter.
At least three Chinese companies have postponed their plans to list shares on the US stock exchange. These include bike-sharing platform Hello, podcast company Ximalaya and cloud computing company Qiniu.
Accordingly, Hello Company, which owns a platform for sharing bicycles and selling electric scooters, has postponed its share offering and has not yet decided on an appropriate valuation for this business because of the caution of investors. invest in new stocks. In the past, Hello planned to raise between $500 million and $1 billion, but the final figure depends on the specific valuation.
Leaders of these companies have also stopped calling for investment despite filing with the US Securities and Exchange Commission (SEC) more than two weeks ago. In the US, businesses can launch fundraising events two weeks after officially submitting their documents to the committee.
Podcast company Ximalaya has postponed its US IPO. Photo: VCG .
The reason for the suspension of listed companies is said to be the recent decline in the stock market, investor sentiment towards companies with high growth potential becoming more pessimistic and stock movements. After the IPO of some other businesses like Waterdrop was not very positive.
Shares of insurance technology company Waterdrop are down 40% from their asking price after its IPO earlier this month. Shares of the lifestyle brand platform are also 9% below their IPO price.
Among the 34 Chinese companies listed on the US stock exchange this year, the shares of 20/34 companies, or about 59%, have declined. Among these are shares of two companies with the largest IPOs, including e-cigarette maker RLX Technology and online Q&A service provider Zhihu. As for the group of Chinese enterprises offering shares for the first time in the US in 2020, the shares of about 40% of enterprises are below the floor price.
"The above factors have made market conditions more unpredictable for new businesses. Many businesses have chosen to observe the market for a while longer to wait for the situation to stabilize," said Head of the Department. Mainland China stock trading at Hogan Lovells Law Firm – analysis by Ms. Stephanie Tang.
The postponement of IPOs by a number of mainland Chinese and Hong Kong companies has halted the record-high wave of listings on the US stock exchange since the beginning of the year. In the first five months of the year alone, mainland Chinese and Hong Kong businesses have raised $7.1 billion.
Demand for IPOs of businesses increased when governments around the world simultaneously launched stimulus packages, interest rates fell to record lows, stock markets in many countries rose sharply despite US-China tensions. . Many Chinese enterprises still want to IPO on the US floor despite facing the risk of being delisted later.
Through the end of May 21, the S&P 500 index had two weeks of declines as investors worried about inflation risks and its impact on technology and growth stocks.
The CSI 300 index of the Chinese stock market is still in a correction phase, (currently down more than 10% from its peak in February 2021); while the Nasdaq Golden Dragon Index, an index that tracks shares of Chinese companies listed in the United States, is down 30% from its peak set in the same month.
However, many people believe that the challenge that Chinese companies want to list in the US is facing only in the short term. Many investors still expect the IPO of a company known as the owner of the car-sharing app Didi Chuxing. This is a company that has secretly applied for approval for an estimated multi-billion dollar share listing. The IPO of this company can be considered as a "test" of investors' interest in Chinese corporate stocks.
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