Despite tensions between the United States and China, investors of the US stock markets showed affinity for Chinese companies and which reached a six year high in 2020.
According to a recent report from Renaissance Capital, so far this year, $11.7 billion through 30 initial public offerings in the US was raised by China based companies.
That amount of capital raised by Chinese companies form the US stock market was the highest since 2014 when $25.7 billion was raised by a total of 16 Chinese companies, the report noted. That year, the bulk of that amount was raised by Alibaba in what was then the biggest IPO ever to date.
IPOs from financial technology company Lufax and online real estate platform Ke were among the major Chinese IPOs in the US this year. According to Renaissance Capital, the Chinese companies also ranked among the top ten public offerings in America this year.
Among the other major Chinese listings in New York this year were Walmart-invested grocery delivery company Dada, electric vehicle start-ups Xpeng and Li Auto and BlueCity, owner of China’s largest LGBTQ dating app.
Despite a tumultuous year for relations between the world’s two largest economies, there was enough enthusiasm among Chinese companies for the US markets. The administration of the US President Donald Trump has also attempted to prevent American capital form being invested in Chinese assets apart from the ongoing trade tensions between the two countries.
Cross-border business activity has been slowed by the novel coronavirus pandemic and the health crisis has also resulted in an international dispute over whether Covid-19 originated in China and how much of the blame of the pandemic should be attributed to China.
Because of the raging pandemic as well as the emergence of the accounting scandal at Luckin Coffee in April prompted some Chinese companies to postpone their plans for a US listing earlier this year. There was negative sentiment tin the market and among companies wishing a US listing after the delisting of Luckin Coffee this summer from the Nasdaq which was about a year since the Chinese start-up became the first company since 2000 to achieve a $3 billion valuation in less than 24 months.
There have been dramatic fall in other Chinese companies as well. There has been an almost 76 per cent fall in stock price of Phoenix Tree since listing on the New York Stock Exchange in January, primarily because of concerns over reports of the finanicla position of a residential rental subsidiary of the company called Danke.
Renaissance said, so far this year, Phoenix Tree is the worst-performing IPO. On the overall, returns of 81 per cent were reaped on the average by Chinese companies that raised at least $100 million this year, showed analysis by Renaissance.
Hong Kong-based companies were included in the Renaissance Capital data. Unique IPO situations such as listings of special-purpose acquisition companies (SPACs) and best-effort IPOs were excluded in the analysis.
(Adapted from CNBC.com)