The number of initial public offerings (IPOs) by China’s corporations increased in March as some of them hurried to set up offshore listings before rules that will complicate the process went into effect.
However, several of these offerings were met with a muted response due to the jittery markets.
In March, seven Chinese corporations, including Chanson International and Hongli Group, launched public offerings to raise a total of $82.3 million, compared to just four in the two months prior.
Objective of China’s new rules
Only six mainland China-based corporations launched in the United States, so even though the numbers are not large, the surge is noteworthy. IPOs in the Sino-US Tensions and stringent regulatory oversight on both sides have a negative impact on investor demand for such listings.
The new rules in China, which were published in February and will take effect on March 31, are intended to open up opportunities for international offerings that were all but eliminated as a result of regulatory crackdowns that began in the middle of 2021.
They also impose an approval system with a focus on national and data security on a previously free-wheeling market, which is why some businesses are rushing to enter the market before them.
According to Stephanie Hu, head of Asia investment banking at EF Hutton, which served as the book-runner for Chanson’s listing, there has been an apparent rise in Chinese corporations looking to list their securities in the United States this month as a result of the uncertainty brought on by the new offshore listing regulations.
Read more: Social Security benefits: Maybe your missing out your $182,370; Check now!
New system mandates material be submitted to the China Securities Regulatory Commission
This will lessen regulatory uncertainty and standardize domestic firms’ international listings, according to Mandy Zhu, head of China Global Banking at UBS. It’ll probably take a long time, too.
One of the new listings was the bakery chain Chanson International, which made its Nasdaq debut on Thursday.
“It is true that we don’t need approval from associated departments of China if we list before March 31,” said Chairman and CEO Gang Li.
The listing only generated a pitiful $13.6 million, and it immediately started to lose value before closing nearly 40% below the issue price. This could indicate that the markets, which have been rattled by banking jitters, are not in the mood for small Chinese listings.
Earlier this week, there was little investor interest in the U.S. listings of the steel producer Hongli Group, the wheelchair manufacturer Jin Medical International, and the food grain producer YanGuFang International Group.
Read more: Apple introduces “buy now, pay later” program that enables people to take out loans for purchases
