More Chinese tech companies likely to list in US: experts

Source: Global Times Published: 2020/9/6 20:23:40

A Luckin booth situated in an office building in Guangzhou, South China's Guangdong Province in September Photo: VCG

China has become an important and responsible source of innovative companies and a stabilizing force for the US stock market, experts said, predicting that more technolo-gy companies are to seek US listings.

The comments came as Fang Xinghai, vice chairman of the China Securities Regula-tory Commission, said Sunday during the ongoing China International Fair for Trade in Services (CIFTIS) that with China and the US strengthening their communication, Chinese companies have not stopped their pace of US listings.

The opening-up of China's capital market over the past three decades has been stable and has avoided causing shocks to the market, Fang said.

Chinese companies are ahead of the US in terms of pioneering new technologies and new ways of doing business, and China also has a domestic consumer market of more than $5 trillion in terms of retail sales, said Tian Yun, vice director of the Beijing Eco-nomic Operation Association.

"These factors have led to the creation of many unicorns in China, and the NASDAQ and the New York Stock Exchange are very eager for such Chinese companies to go public there as an important benchmark for them to stay competitive in the global rankings," said Tian, adding that without the participation of these excellent compa-nies, the global market position and competitiveness of the established US exchanges would be reduced.

Recently, Chinese companies have been in the spotlight as they listed on the US stock market. Among them, electric-car maker Xpeng Motors and internet real estate agency and online housing property platform Beike debuted on the New York Stock Ex-change. The two major investors behind Xpeng Motors and Beike are China's leading internet companies, Alibaba and Tencent.

The discrepancies between Chinese and US capital markets would still lead to some Chinese businesses opting to float on the US market, because they don't meet domes-tic listing requirements or for other reasons, according to Stephen Xie, PwC China corporate finance partner.

Despite this, the rapid rise of China's own exchanges, particularly its STAR Market in Shanghai and ChiNext board in Shenzhen, will lure more premium Chinese firms, notably unicorns (start-ups valued at more than $1 billion), where they will be closer to local consumers and investors, Xie told the Global Times on Sunday on the side-lines of the services trade show.

That also attests to the nation's call for a dual circulation approach to economic growth: the domestic market is being relied on as the mainstay while the intercon-nectedness between the domestic and overseas markets is preserved, he said, ar-guing that China will become an increasingly open market.

In addition to China's commitment to opening up its capital market, the authorities are also moving to further regulate cross-border risks and financial fraud by listed com-panies.

The nation will move swiftly to prevent and address cross-border capital market risks, strengthen regulatory cooperation in auditing cross-border listed companies, and toughen the crackdown on financial fraud, said Fang at Sunday's event.

Chinese regulators said on July 31 that they will impose administrative penalties on Luckin Coffee as well as related companies that helped it fabricate accounts and en-gage in false advertising, less than a month after the company was delisted from the NASDAQ due to accounting fraud.

Experts said that as China is beginning to scrutinize domestic companies listed in the US, those like Luckin that rely on capital investment to tell an investment story with-out much technological innovation will be subject to stricter scrutiny.

Posted in: ECONOMY

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