1. Chinese Listings Heading Across Atlantic to Europe
- This year, Chinese companies have raised more than five times as much money through share sales in Europe than the U.S., with exchanges in London and Zurich benefit from fraying geopolitical ties between the superpowers.
- However, there was a caution that the European share sales were unlikely to rival the flow of dealmaking by Chinese groups in New York.
Since the New World was discovered, emigration has almost always been one-way from Europe to the Americas since.
But despite having the deepest and most liquid capital markets in the world, geopolitical strife between Washington and Beijing has seen a slew of Chinese listings leave the U.S. and head out to other exchanges, including European ones.
Chinese listings on Wall Street were shuttered in July 2021 after ride-hailing app Didi Chuxing was accused of cyber security breaches by Beijing regulators just days after its US$4.4 billion initial public offering.
The Didi Chuxing incident further soured a long-running dispute over U.S. regulators’ access to Chinese audit files, which could lead to Washington banning trading in all Chinese companies in 2024.
A landmark audit inspection agreement between Beijing and Washington will be tested this month as the fate of about 200 Chinese listings on Wall Street hang in the balance.
Hongkong, China’s largest offshore market, had US$6.6 billion worth of IPO fundraising by Chinese companies in total this year, down 80% compared to a year ago as the regulatory escalation has also damped Chinese corporate fundraising in Hong Kong.
Against this backdrop, Chinese companies have been rushing to find alternative markets, including European stock exchanges such as London, Switzerland and Germany and for the first time, Chinese corporate dealmaking in Europe has exceeded that in New York.
This year, Chinese companies have raised more than five times as much money through share sales in Europe than the U.S., with exchanges in London and Zurich benefit from fraying geopolitical ties between the superpowers.
According to data from Dealogic, five Chinese companies have raised over US$2.1 billion on stock exchanges in Zurich and London this year alone, versus the less than US$400 million in total raised from listings in New York.
Zurich, in particular, has benefited from a new “stock connect” scheme with mainland Chinese exchanges and its less demanding requirements over the transparency of company audits.
However, there was a caution that the European share sales were unlikely to rival the flow of dealmaking by Chinese groups in New York, which raised more than US$100 billion from share sales on Wall Street over the past two decades.
The European economy is also facing strong headwinds from soaring natural gas prices, staggering inflation, and slowing economic growth.