Those who are exposed to Chinese ADRS-OB It is a CEO of a Chinese company listed in the USA or a stock strategist that deals with the Chinese market, everyone now takes into account one question: Will the USA really climb chinese companies from their exchanges?
Some of the largest companies in China are trading in the United States, including JD.com (No. 47 on the Fortune Global 500), Alibaba (No. 70) and PDD Holdings (No. 442). But these giants and many smaller companies could have their existence because US President Donald Trump, who were launched by a revived trade war against Beijing against Beijing against Beijing against Beijing.
Last week several Republican congress members, including representative John Moolenaar, chairman of the House Select Committee for the China Communist Party, wrote recently appointed Paul Atkins, chairman of the security and stock exchange commission, “to express the serious concern of the continued presence of Chinese companies on US exchanges”.
In a letter from reported by The Finance timesPresent Legislators pointed out the Chinese and small companies cunning in the USA, from giants such as Alibaba and JD.com to smaller startups such as EV brand Xpeng and self-driving auto provider Pony.ai.
“Everything is on the table”
Worries about delistry have grown Since the end of FebruaryWhen Trump repeated the danger of stepping from the US exchanges in his “first investment plan in America”. In his memo, Trump ordered the officials to determine whether Chinese companies maintain US examination standards and Examine the structures These companies list after foreign stock exchanges.
Since then, the administrative officers have refused to exclude the Chinese companies in the United States, with finance Minister Scott Bessent found in a television interview in mid -April that “that” that that “Everything is on the table. “”
“The threat is growing significantly,” says Sandeep Rao, a researcher in Hebel shares.
The Nasdaq Golden Dragon China Index, which is pursued in the USA in the USA, has dropped by around 7% since the “Liberation Day”. For comparison, the Hong Tech Index Hong Kong Hang, the Tech company, who were traded in the Chinese city (including some that also trade in the USA), has dropped by 4.6% in the same period.
Chinese companies have long turned to the deep and liquid markets of the United States to obtain capital. Alibaba’s IPO on the New York Stock Exchange in 2014 collected $ 25 billionThe world’s largest IPO at this time and was only replaced by the list of Saudi Aramco in Riad by Saudi Aramco.
At the end of March, 286 Chinese companies on US exchanges with a total market value of 1.1 trillion dollars are listed. South Chinese morning post.
But US investors have grumbled through poor exams among Chinese companies. Technically speaking, companies that are listed in the USA have to open their books for US supervisory authorities, but Chinese officials often offer such access, citing national security. The revelation in 2020 that the Chinese coffee chain Luckin coffee had inflated its turnover was the last straw Ordered Chinese company To access to US supervisory authorities or the risk of being thrown at the US exchange.
After years of negotiations, China agreed in 2022 to check the supervisory authorities examination documents The Chinese city of Hong KongRaise the delistative threat and calming investors.
Nevertheless, the damage had already been done when the US Chinese companies explore secondary entries in Hong Kong. Last year Alibaba improved his listing in Hong Kong To a primary list so that the Chinese e-commerce company accepts Chinese investors on the city’s connective connecting system to the south.
Some investors “moved from the US ticker to the Hong Kong Ticker because of the delistative threat,” says Rao.
Hong Kong could be a winner
In mid-April, Goldman Sachs estimated that American institutional investors have distributed shares worth around $ 830 billion to Chinese companies at the Chinese, Hong Kong and US markets market on the Chinese mainland. About 250 billion US dollars are in Chinese Ads.
Nevertheless, “the stocks of shares by foreigners, especially US owners, have dropped sensibly when we were five years ago,” said Cameron Chui, Asia -share strategist at the JPMorgan Private Bank, during a Wednesday to reporters when they were asked the possibility of delistations. “The risk was definitely reduced.”
Rao notes that US investors may continue to be traded in Chinese companies, even if they are executed -it would only be on the less protected OTC market. Tencent, one of the largest technology companies in China, acted its main list in Hong Kong, but also on the US OTC market.
In the meantime, Chinese companies are already murdering on other options. In a conversation with reporters on the sidelines of the Shanghai Auto Show, Pony.ai -Ceo James Peng said a secondary listing in Hong Kong was possibleAlthough the startup has confirmed, the release of its next generation of vehicles concentrated.
Geely car is also take his US EV brand Zeekr private, only A year After his New York IPO to optimize the business activity of the Chinese LPG and improve profitability.
In his mid-April report, Goldman Sachs emphasized 27 Chinese companies in the United States, which is likely to be considered for a list in Hong Kong (regardless of whether a secondary or primary list), including PDD, retail stock trading platform FUTU and Digital Logistics Platform Full Truck Alliance.
However, some Chinese companies defy geopolitics to pursue a US list. Chaagee, a Chinese tea chain, increased $ 411 million In a US IPO on April 17 at Nasdaq.
Hong Kong looks like a more attractive – or at least less bad place to act shares. A primary list in the city gives the possibility that Chinese investors will act on the company’s shares on mainland. Have liquids to the south (i.e. from the Chinese mainland to Hong Kong) have risen in the past few monthsHow Chinese investors hold on the mainland The AI boom represented by companies such as Alibaba and Semiconductor International Manufacturing Corporation.
“It makes pretty useful to have at least a secondary listing in Hong Kong if you are a Chinese company in the USA,” says Rao.
The city goes through an IPO resuscitation, since Chinese companies on the mainland now hope to open up global capital by listing “overseas”. Last November, A 4 billion US dollar IPO of MineaThe world’s largest manufacturer of household appliances started things; Mixture, an ice chain with more sockets than McDonald’s, followed in March.
Hong Kong expects at least two more blockbuster -Pos in the coming months. Catl, the main supplier of batteries for Tesla, hopes for it Collect 5 billion US dollars in Hong Kong in the near future. (JPmorgan and Bank of America support the IPO that has Incorated congress test.) Chinese car manufacturer Chery Auto is also prepare For a list in Hong Kong to collect 1.5 billion US dollars.
But Hong Kong is not a perfect replacement for New York. “There are no positive statements. The liquidity in Hong Kong is not the same as in the USA,” said Chui on Wednesday.
This story was originally on Fortune.com