MILAN, Sep 9 (Class Editori) — Chinese companies open the European route to the stock market. The geopolitical and economic clash between Washington and Beijing has stalled listings on Wall Street, a favorite destination for Asian companies to land on the Western market up until now. According to a Dealogic analysis, in 2022 five Chinese IPOs raised a record-breaking 2.1 billion dollars in Europe. Four of these companies chose Zurich as their destination, while the other preferred the City of London.
In particular, the Swiss marketplace is benefiting from the agreement reached in late July between local operator Six and the Chinese stock exchanges to facilitate dual listings. Under the arrangement, accounting standards adopted in China and related audits of financial statements will also be accepted and recognized in Zurich, limiting regulatory burdens for Chinese companies. In contrast, after turning a blind eye for years, for some time now the US administration has demanded more transparency on audits of Chinese companies listed on Wall Street, otherwise threatening them with ex officio delisting starting in 2024. A few weeks ago, Washington and Beijing reached a compromise that will allow US authorities to have access to accounting documents and to choose for themselves which companies to inspect and audit.
It seems the agreement has not reassured Chinese companies, which have raised only 400 million dollars on Wall Street since the beginning of the year, compared to the 12.4 billion dollars of the first half of 2021. According to multiple legal experts, the implementation of the recent agreement between the US and China will take time and, most importantly, an interpretive effort which implies a certain identity of views between the contracting parties, which is far from obvious nowadays. First the trade and then the geopolitical disagreements between the two superpowers are inevitably being reflected in their economic and financial ties. In addition, Beijing is certainly not encouraging US stock prices, as the Didi Chuxing affair shows.
Withing days of its 4.4-billion-dollar listing on Wall Street in July 2021, the sharing platform received a fine of 1.2 billion dollars from Chinese authorities for violating some norms in terms of data security. A few months later, in May 2022, the company decided to delist itself from the New York Stock Exchange, where its shares had dropped by more than 80%. It is a lesson that American investors will not forget easily and one that will probably make things difficult for future plans of dual listing between China and the US. According to Dealogic’s data, Europe, and in particular neutral Switzerland, could fill in the spot.
(Source:Class Editori)
Notice: No person, organization and/or company shall disseminate or broadcast the above article on Xinhua Silk Road website without prior permission by Xinhua Silk Road.
A single purchase
