Last Week, Chinese Autonomous Driving Companies Like WeRide and Horizon Robotics
Successively Listed in New York and Hong Kong
As the global initial public offering (IPO) market shows signs of recovery, there are expectations that the number of Chinese companies planning to list on the U.S. and Hong Kong stock exchanges will increase next year.
On the 28th (local time), CNBC reported, "The IPO market, which had been subdued due to heightened trade tensions between China and the U.S. and high interest rates, is gaining renewed attention following a series of successful overseas listings by Chinese companies this year," adding, "Analysts expect an increase in Chinese companies listing in the U.S. and Hong Kong next year."
Since Didi Chuxing, China's largest ride-sharing service provider, was listed on the New York Stock Exchange in 2021 and then proceeded to delist in less than a year, Chinese companies have largely refrained from listing in the U.S. At that time, just two days after Didi Chuxing's listing, it faced a stringent cybersecurity investigation by U.S. regulators, followed by an 8 billion yuan (approximately 1.519 trillion KRW) fine imposed by the Chinese authorities, which created a burden for Chinese companies considering U.S. listings.
However, this year, Chinese companies' IPOs in the U.S. market are gradually regaining momentum. Last week, Chinese autonomous driving company WeRide was listed on Nasdaq, surging more than 20% intraday on its first day. Earlier this month, Chinese robo-taxi company Pony.ai filed for a Nasdaq listing with the U.S. Securities and Exchange Commission (SEC). The Hong Kong IPO market, which benefited from the U.S.'s tightened IPO regulations against China, also experienced an upswing. Last week, China's bottled water company China Resources Beverage (CRB) and autonomous driving technology company Horizon Robotics raised $649 million and $696 million respectively, entering the Hong Kong stock exchange.
Marcia Ellis, Global Co-Chair of Morrison & Foerster, a Hong Kong-based private equity firm, explained, "After several years of stagnation, the IPO market is expected to recover next year, supported by the conclusion of the U.S. presidential election and a decline in interest rates," adding, "Although there is still negative market perception regarding regulatory issues between the U.S. and China, Chinese companies are increasingly interested in listing in Hong Kong or New York due to difficulties in listing on the Chinese mainland and pressure from shareholders for quick exits."
If Chinese IPOs recover in the U.S. and Hong Kong markets, it is expected to open up opportunities for Chinese venture investors, who have been constrained by the IPO market downturn, to invest in U.S. startups. Ellis noted, "Despite regulations targeting China, the depth and breadth of the U.S. capital market remain factors that make many companies seriously consider listing in New York," and evaluated, "Especially companies focused on advanced technology but not yet profitable often believe that the U.S. is the place that better embraces their vision and story." According to global accounting firm Ernst & Young (EY), more than half of the companies listed in the U.S. since last year are foreign firms, marking the highest level in 20 years.
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