Chinese Companies Face Complications in Listing on U.S. Stock Exchanges, Says Head of China at NYSE
Chinese companies have a strong desire to list on U.S. stock exchanges, but the process has become more complicated, according to Kobe Ge, the head of China at the New York Stock Exchange. Despite the challenges posed by Covid-19 restrictions and regulatory uncertainty, many of these issues have now been resolved, and there is still significant interest from Chinese businesses in listing in the U.S. However, these companies are not familiar with the procedures, which have become more challenging in recent times.
Ge noted that listing in the U.S. was relatively easy in the past, with Chinese firms able to complete a U.S. IPO in just four-and-a-half to five months. However, due to new rules from the China Securities Regulatory Commission, companies now need to spend more time, with a preparation period of up to 12 months.
The new measures, which came into effect in March, require domestic companies seeking to list in the U.S. or Hong Kong to comply with national security measures and the personal data protection law before going public overseas. As a result, the few Chinese companies that have been able to list this year have mostly been smaller firms.
Political tensions between the U.S. and China have also added to the uncertainty for Chinese companies and investors. President Joe Biden signed an executive order in August aimed at regulating new U.S. investments and expertise that support China’s development of sensitive technology. The order targets investment in semiconductors, microelectronics, quantum computing, and certain artificial intelligence capabilities. Ge highlighted that until the specifics are released, investors may adopt a wait-and-see approach.
Despite these challenges, Ge remains confident that Chinese listings in overseas markets will bounce back as long as domestic firms focus on building strong businesses. He emphasized the need for mature business models and predictable profits, rather than just high growth, to attract investors.
Looking ahead, Ge and Robert H. McCooey, Jr., a vice chairman at Nasdaq, both believe that the IPO market will improve in the April to October period next year. McCooey highlighted a strong pipeline of Chinese companies intending to list on the exchange soon.
As of January 2023, there were 252 Chinese companies listed on U.S. exchanges, with a total market capitalization of $1.03 trillion, according to official data.
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