U.S. to see more Chinese listings as Biden will make art of deal easier, advisors say

[November 10, 2020]    By Scott Murdoch

HONG KONG (Reuters) - Chinese companies' stock market listings in the United States reached a six-year high in 2020 and advisors expect the trend to accelerate in the year ahead in expectation of a stable regulatory regime under U.S. President-elect Joe Biden.

Twenty six initial public offerings (IPOs) of Chinese firms worth $10.6 billion have been completed in the United States so far in 2020, up from the $3.4 billion worth of deals last year, according to Refinitiv data.

The volume this year is already the highest since 2014 when there was $29 billion worth of Chinese IPOs in the United States led by Alibaba Group Holding Ltd's $25 billion listing, the data shows.

While Biden, set to take office on Jan. 20, is not expected to make major changes to Washington's tough stance on China-led investment, bankers and lawyers believe policy and regulatory stability could return following four turbulent years of the Trump administration.

"We won't be waking up in the middle of the night anymore to a Trump tweet that can ruin a deal," said a Hong Kong capital markets lawyer, who could not be named as he was not authorised to speak to media.

Analysts have said Biden would take a more measured approach to Chinese tech threats but was unlikely to unwind President Donald Trump's unilateral curbs on Chinese firms such as Huawei Technologies Co Ltd [HWT.UL] and Bytedance.

Capital markets consultancy Kapronasia founder Zennon Kapron said while technology would remain a sensitive topic the appetite of Chinese tech firms, particularly fintech, to float in the United States could increase if relations improved.

The shelving by regulators of Ant Group's planned $37 billion IPO in Shanghai and Hong Kong earlier this month, he said, could prompt Chinese tech companies to look abroad.

"It seems that the new U.S. administration may take a hard, but measured approach to U.S.-China relations," Kapron said.

"This move may create renewed interest due to the lack of clarity on the specific reasons that the Ant Group IPO was delayed."

Among the prospective issuers, Chinese beauty company Yatsen Holding Ltd has filed to list on the New York Stock Exchange and is looking to go public before the end of the year.

Another a draw card for an overseas listing is that regulation of financial technology companies in the United States is generally seen as lighter compared to China and Hong Kong, according to advisors working in the sector.

But the threat of Chinese companies being delisted for not meeting U.S. auditing standards will persist with a Biden administration, with no indication the proposed rules will change.

Prospects of a higher valuation on the world's deepest stock market and access to a larger investor base, however, makes the risk of eventual delisting manageable, advisers said.

"Predictability is the biggest asset for IPO activity," said JPMorgan Asset Management Chief Asian Market Strategist Tai Hui.

(Reporting by Scott Murdoch; Editing by Sumeet Chatterjee and Stephen Coates)

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