The number of Chinese companies listed on US equity markets have risen 14 per cent in the past seven months despite Washington’s intensifying efforts to limit market access to businesses it deems a security threat. As of May 5, as many as 248 Chinese companies were listed on major US stock exchanges – Nasdaq, the New York Stock Exchange, and NYSE American – up from 217 on October 2, according to a report released on Thursday by the US-China Economic and Security Review Commission, a congressional advisory body. During that time, 17 Chinese companies were also delisted from US exchanges. In the year ending in April, Chinese companies have raised a total of US$17.55 billion in US initial public offerings, more than four times the US$4.1 billion raised during the same period a year earlier, Dealogic data shows. The 12-month volume was the highest since April 2015. “US capital is cheap right now, and Chinese companies, like US companies, did not want to miss the gold rush,” said Benn Steil, director of international economics at the Council on Foreign Relations in New York. US industry group applauds NYSE move to delist three Chinese telecoms Matthew Kennedy, a senior IPO strategist at Renaissance Capital in New York, added that the activity showed the Chinese business view that “while Hong Kong will always be there, they may not always be able to list in the US. “So raise US dollars now while they can, face potential delisting sometime in the future.” US investor interest in Chinese stocks, though, has begun to grow tepid. Total market capitalisation of these companies dipped slightly – by US$100 billion – to US$2.1 trillion since October, a period when both the S&P 500 index and the Dow Jones Industrial Average rose 23 per cent. That compared with the previous year when the total market capitalisation for Chinese companies nearly doubled from the year before, dramatically outpacing major indexes. Kennedy said there were several reasons behind the recent declines Chinese stocks were seeing in the US, including geopolitical tensions. “The US has a tougher stance towards China and that really translated into poor returns. The anticipation of delisting may have contributed to the recent decline,” he said. Making things worse, Kennedy added, “Chinese government’s tougher stance towards tech giants has also contributed to the sell-offs”. Still, a number of Chinese firms have announced plans to list in the US in recent weeks, including the social networking app Soulgate, podcast platform Ximalaya and bike-sharing company Hello. “I‘m surprised that we’re still seeing so many companies file,” said Kennedy. “We’ve recently seen the IPO market underperform over the last two months. So we do expect it to be harder for Chinese companies to go public. There’s going to be valuation pushback.” Chinese stocks came under extreme pressure last year as the Trump administration contended many companies constituted a national security threat. In November, then-president Donald Trump issued an executive order banning Americans from investing in 44 companies that the Defence Department identified as having ties with the Chinese military. The 17 companies removed from American exchanges in recent months include Semiconductor Manufacturing International Corporation (SMIC) and the China National Offshore Oil Corporation (CNOOC), according to the congressional report. The report also counted the three Chinese telecommunications carriers China Unicom, China Telecom and China Mobile among the delisted firms; the NYSE filed for delisting requests last week. The American depository receipts (ADRs) of those companies will stop trading 10 days after the filings. Xiaomi and Luokung Technology, two other companies on that list, were allowed to remain on the exchanges after federal judges ruled in favour of the businesses and found that the Defence Department list was “overly broad”. Xiaomi’s rare victory against US blacklist could pave way for other Chinese tech giants Separate US legislation – the Holding Foreign Companies Accountable Act – that was signed into law in December requires foreign companies to follow the same financial oversight as any American public company. The law would require Chinese companies listed on US markets to submit audits to US regulators, a decades-old issue that Beijing refused to comply with, citing state secrets. Under the new law, companies would be removed from exchanges if they fail to comply with audit rules for three consecutive years. While interim rules have recently been adopted, the final regulations are pending.