Several Chinese companies have withdrawn from U.S. stock exchanges since 2019, indicating escalating mistrust between the world’s two largest economies.
Despite the ongoing delistings, Chinese initial public offerings (IPOs) continue to enter the market. However, these are mostly small, speculative stocks, not the large-scale “red chips” of the past. The 62 Chinese IPOs in 2024 raised under $7 million each on average.
Some of these companies are having difficulty meeting the minimum requirement of 300 public shareholders, sparking investor concerns about possible risks or fraudulent activity.
For the first time since the 1990s, no Chinese state-owned enterprise is listed on a U.S. stock exchange. China Mobile was delisted in 2021 following U.S. sanctions tied to national security concerns.
Junheng Li, the founder of JL Warren Capital, noted that the departure of Chinese companies from U.S. exchanges is inevitable. She believes the most compelling investment opportunities now are in cryptocurrency and artificial intelligence.
On the other hand, Andrew King, a San Francisco venture capitalist, feels that excluding Chinese companies from U.S. capital markets has limited impact if U.S. investment banks assist them in going public elsewhere. "It builds the capital markets in places like Hong Kong using U.S. money," King stated.
This warning further underscores the potential impact of the deteriorating relations between the two economic powerhouses.
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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