Chinese Companies Rush for US Listings ahead of New Rules

An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
TT
20

Chinese Companies Rush for US Listings ahead of New Rules

An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters

The number of US IPOs by Chinese firms jumped in March, as some of them rushed to set up offshore listings before rules take effect that will complicate the process, though with markets jittery, several met with a tepid response.

Seven Chinese firms including Chanson International and Hongli Group have launched public offerings in March to raise a combined $82.3 million, compared with just four in the preceding two months, Reuters reported.

Although the numbers are not huge, the surge stands out since only six mainland China-based companies launched US IPOs in 2022 as Sino-US tensions and in particular strict regulatory scrutiny on both sides hurt investor demand for such listings.

China's new rules, published in February and which take effect on March 31, are aimed at reviving the path for international offerings, which all but disappeared in the wake of regulatory crackdowns beginning in the middle of 2021.

They also impose an approval system on a once freewheeling market, with a focus on national and data security, hence the hurry from some firms to get in ahead of them.

"There is obvious acceleration in Chinese companies seeking US offerings this month, considering the uncertainty posed by the new offshore listing rules," said Stephanie Hu, head of Asia, investment banking at EF Hutton, which was a bookrunner on Chanson's listing.

The new system requires submitting materials to the China Securities Regulatory Commission (CSRC) and getting the green light from relevant government bodies.

That will "reduce regulatory uncertainty" said Mandy Zhu, head of China Global Banking at UBS, and standardize domestic firms' international listings.

It is also likely to be time consuming.

Among the new listings was bakery chain Chanson International, which debuted on the Nasdaq on Thursday.

"It is, indeed, that we don't need to get approval from associated departments of China if we get listed before March 31," chairman and CEO Gang Li told Reuters.

"But we will abide by Chinese rules and carry out all follow-up work cooperation if necessary."

The listing raised a modest $13.6 million, and fell heavily in its first day of trading and closed almost 40% below the issue price, perhaps a sign that markets roiled by banking jitters are in little mood for small Chinese listings.

Earlier in the week, steelmaker Hongli Group, food grain manufacturer YanGuFang International Group and wheelchair-maker Jin Medical International listed in the US, also receiving tepid responses from investors.

Reuters reported on Thursday that London is also courting new Chinese listings.



Oil up 1% on Potential for US-China Talks, Iraq Output Cut Plan

OPEC logo is seen in this illustration taken, October 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
OPEC logo is seen in this illustration taken, October 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
TT
20

Oil up 1% on Potential for US-China Talks, Iraq Output Cut Plan

OPEC logo is seen in this illustration taken, October 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
OPEC logo is seen in this illustration taken, October 8, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

Oil prices rose around 1% on Wednesday, as the market drew some strength from the possibility of trade talks between China and the United States and a report that Iraq will cut oil production in April.

Brent crude futures rose 70 cents, or 1.08%, to $65.37 a barrel by 1311 GMT while US West Texas Intermediate crude was also up 70 cents, or 1.14%, at $62.03.

Prices rose after a Bloomberg report quoted an anonymous source as saying that China wants more respect from the Trump administration before it will agree to talks, analysts said.

The source was also quoted as saying China wanted the US to appoint a new primary contact in future talks.

"A de-escalation of the trade war between the US and China would reduce the downside in economic growth prospects and limit the downside for oil demand growth," said UBS analyst Giovanni Staunovo.

Adding to bullish sentiment in the oil market on Wednesday, Iraq aims to cut April output by 70,000 barrels per day in April in the face of pressure to meet its OPEC+ targets, Bloomberg reported.

Price gains, however, were limited by expectations from the International Energy Agency on Tuesday that global oil demand will grow at its slowest for five years in 2025.

The World Trade Organization sharply cut its forecast for global merchandise trade on Wednesday, adding that US tariffs could bring about the heaviest slump since the height of the COVID pandemic.

Concerns over Trump's escalating tariffs, combined with rising output from the OPEC+ group comprising OPEC and allies such as Russia, have dragged oil prices down by about 13% this month.

The uncertainty surrounding trade tensions has led several banks, including UBS, BNP Paribas and HSBC, to cut their crude price forecasts.

Trump has ratcheted up tariffs on Chinese goods, prompting Beijing to impose retaliatory duties on US imports in an intensifying trade war between the world's two biggest economies.

Data on Wednesday showed China's gross domestic product (GDP) grew 5.4% year-on-year in the first quarter, beating the 5.1% expected in a Reuters poll.

"The better than expected performance was precipitated by exporters front-loading shipments ahead of the implementation of US excise duties on Chinese goods and, in all probability, will not be repeated for the rest of the year as the two biggest economies in the world are doing their best to decouple," said PVM Oil analyst Tamas Varga.