Chinese companies head for US listings
Chinese firms are flocking to the initial public offering market in the United States in their biggest numbers since 2010, drawn by soaring valuations for technology start-ups and undeterred by a flare-up in an accounting row between Washington and Beijing.
Chinese firms are flocking to the initial public offering market in the United States in their biggest numbers since 2010, drawn by soaring valuations for technology start-ups and undeterred by a flare-up in an accounting row between Washington and Beijing.
The return to US shores comes on the back of renewed investor enthusiasm for China plays, particularly for internet stocks.
Transaction volume in the country's online retail market jumped 42 per cent last year to 1.85 trillion yuan (HK$2.35 trillion) and was expected to almost double by 2016, figures from iResearch showed.
That has trumped lingering concerns about accounting irregularities and corporate governance issues that have forced many US-listed Chinese firms to be delisted since 2011.
The delistings have prompted US investors to be more discerning about share offers from China this time round. The bar for Chinese companies seeking US deals is higher, improving the quality of recent offerings, bankers say.
But John Hempton, the chief investment officer of Sydney-based Bronte Capital, said a lack of penalties for Chinese firms' past misdeeds in the 2011 scandals meant the potential to find accounting fraud was always there.
Newly US-listed Chinese firms rocketed an average 53 per cent on their debuts last year, consulting firm EY said. The Nasdaq Composite Index has rallied 28 per cent over the past year.
The US market affords mainland Chinese companies options not available in Hong Kong, such as dual-class share structures and the ability to list without having turned a profit. It also offers far more liquidity than the newly reopened listing market in mainland China.