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Nasdaq expects more China IPOs despite regulatory logjam

Written by Nikkei Asia Published on   3 mins read

China is a market that will not be ignored despite geopolitical frictions, an exchange official said.

More Chinese companies are expected to go public this year in the US even as ties between Washington and Beijing remain strained and strict crossborder listing rules have effectively closed the pipeline, according to the vice chairman of Nasdaq.

“China listings are going to come back. China is not a market that will be ignored,” Robert McCooey, who also heads new listings for Asia Pacific companies on the company’s exchange, told Nikkei Asia, citing a more “robust market.”

24 Chinese companies listed on US exchanges last year, raising USD 656 million, according to a report from the US-China Economic and Security Review Commission, a US government agency.

This year’s listings are on a similar pace, with 12 Chinese companies debuting so far, according to a Nikkei Asia tally. More money is expected, as at least USD 483 million has been raised so far this year.

McCooey admitted that heightened scrutiny by Chinese regulators of companies seeking offshore IPOs have slowed listings in the US, but was hopeful those listings remained “really strong” for this year.

Nasdaq has a “pretty good ongoing dialogue” with the China Securities Regulatory Commission (CSRC), McCooey added.

The CSRC has given approval to 43 companies to list in the US this year compared with 26 companies in the eight months after the new rules came into effect last year. Not all of the Chinese companies with the CSRC’s approval have listed, however.

Chinese companies looking to raise capital on Wall Street, a traditionally popular way to gain significant value, also face growing scrutiny in Washington.

Last month, Republican senator Rick Scott, of Florida, wrote a letter to Nasdaq with concerns over allowing “companies that create a national security risk” to trade on its exchange, more specifically, Chinese lidar company Hesai, which was put on a Defense Department list of companies with Chinese military ties on January 31.

Chinese fast fashion giant Shein’s IPO plans have also been thrust into the spotlight after lawmakers last year urged the SEC to stop the company from going public until it could prove its supply chains in China were free from Uyghur forced labor.

However, Chinese EV maker Zeekr made a strong debut last month on the New York Stock Exchange (NYSE) in what was the biggest IPO for a Chinese company in the US since 2021, when China clamped down on offshore capital raising.

China’s current rules, which came into effect in March 2023, require companies looking to list in the US and Hong Kong to get approval from the CSRC.

They must also obtain approvals from departments overseeing cross-border data security.

But getting the green light from different regulators, many of which have not handled public listings until recently, has been a challenge, according to senior bankers advising on Chinese companies on offshore listings.

The US IPO market is still waiting to rebound after a sluggish couple of years following a boom in 2021, when 311 companies went public—the most in 20 years. But high interest rates and dampened investor sentiment slowed US listings to 54 companies last year, according to data from University of Florida professor and IPO specialist Jay Ritter.

Leading tech companies from Southeast Asia, such as Singapore’s Grab or Vietnam’s VinFast, have been the source of major Asian IPOs on the Nasdaq composite over the past few years, and McCooey is especially excited about a recent uptick in South Korean listings, including the upcoming debut of online comics platform Webtoon Entertainment.

He also expects more Japanese companies, such as pachinko hall operator Libera Gaming Operations, to list on the Nasdaq this year.

“We certainly are going to have more and higher quality listings from Asia this year than we’ve had in the past three years.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.


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