From NYSE To Hong Kong: Over 80 Chinese Firms Pull Plug On US Listings Amid Growing Tensions

Several Chinese companies have withdrawn from U.S. stock exchanges since 2019, indicating escalating mistrust between the world’s two largest economies.

What Happened: Since 2019, over 80 Chinese companies have withdrawn their listings from U.S. stock exchanges, according to data from Wind, reported The Wall Street Journal on Tuesday. The number of Chinese companies listed on the New York Stock Exchange and Nasdaq has fallen to approximately 275, accounting for less than 2% of the total capitalization.

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.

Why It Matters: The departure of Chinese companies from U.S. exchanges is not a new development. In May, senior U.S. lawmakers urged the U.S. Securities and Exchange Commission to delist 25 Chinese companies from U.S. stock exchanges, citing national security concerns over alleged military ties. This move was seen as a significant escalation in the ongoing tensions between the two countries.

Earlier in April, a Goldman Sachs report warned that a potential U.S.-China decoupling could lead to a massive $2.5 trillion sell-off. The report suggested that in an extreme scenario, investors from both countries might be forced to divest their holdings of equities and debt instruments.

This warning further underscores the potential impact of the deteriorating relations between the two economic powerhouses.

On a year-to-date basis, Alibaba Group Holding Ltd BABA, Tencent Holdings ADR TCEHY, PDD Holdings Inc – ADR PDD surged 37.74%, 23.59%, 10.60%, respectively.