Chinese firms raise eight times more funds in European markets than US between Jan-Oct
Published: Nov 08, 2022 04:38 PM Updated: Nov 08, 2022 04:23 PM
Stock market Photo: IC

Stock market Photo: IC

Chinese companies raised more money in European markets than in the US so far in 2022, with funds from Europe equal to about eight times more than that from the US from January to October, statistics showed.

In the first 10 months of the year, seven Chinese companies listed on the Zurich and London stock exchanges, raising more than $2.5 billion and more are reported on their way. In contrast, the amount of funds raised by Chinese companies in the US fell to $303 million during the same period, a 97.67 percent year-on-year plunge.

This year marks the first time that Europe overtook US as the top region for IPOs for Chinese firms, according to Dealogic, a global financial data provider.

As of Wednesday, a total of 31 A-share listed companies announced plans to issue Global Depository Receipts (GDRs). Of them, 24 companies chose to list on the Swiss stock exchange, accounting for 77 percent, while the other three selected the London Stock Exchange. Four companies did not specify their destinations, statistics from domestic financial data provider iFinD showed.

According to the progress of issuances and listings, seven companies have been successfully listed, while other 24 are still in progress.

Analysts said that this could be foreseen as the US had pushed for a "financial decoupling" from China, and it was natural that Europe would become the first choice of Chinese firms for IPOs.

China Securities Regulatory Commission (CSRC), the securities regulator, said in early September that it will optimize the GDR business under stock connect scheme and encourage more Chinese companies to issue GDRs.

GDRs are tradable certificates that are issued to represent underlying shares in a foreign company and traded on a local stock exchange.

Compared with issuing IPOs directly in overseas markets, GDRs cost less and the issuer is already listed in the A-share market, making it easier for GDRS to receive approval in overseas markets, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times.

The first group of Shanghai-listed companies on July 28 successfully landed on SIX Swiss Exchange, Switzerland's principal stock exchange, through GDRs under the China-Switzerland Stock Connect scheme, raising capital totaling $1.6 billion, according to an announcement by the Shanghai Stock Exchange (SSE).

Notably, the SSE said the existing regulatory framework for GDRs in order to allow Chinese companies to list GDRS in Switzerland was revised and took effect on July 25.

The smooth launch of the China-Switzerland Stock Connect will effectively connect the two markets, further promote the sharing of market resources, and contribute to the globalization of companies in the SSE market, the exchange said.

In February, the CSRC revised the rules for the Stock Connect program between domestic and overseas stock exchanges, expanding its scope to include stock exchanges in Shenzhen, Switzerland and Germany.

Previously, only companies listed on the Shanghai and London stock exchanges could participate in the scheme.

Global Times