Chinese companies flood into US IPOs despite writing off threat

HONG KONG (Reuters) – The US government is threatening to remove Chinese companies that do not meet US accounting standards, but mainland companies are rushing to offer their shares on New York exchanges, sometimes in blockbuster deals.

Despite the threat and growing US-China tensions, the location of a valuation on the deepest stock market in the world raises the risk of eventual delisting, while financial technology companies find the regulatory burden of a US list lighter than that. the mainland of China as Hong Kong, companies, advisers and investors say.

“In the immediate term, I do not see these influential views of U.S. markets as a strong choice for mention,” said Jason Elder, a Hong Kong-based partner at law firm Mayer Brown.

So far this year, Chinese companies have raised $ 5.23 billion in U.S. initial public offerings, more than double the $ 2.46 billion for the same period last year, Refinitiv data show.

Property management company KE Holdings BEKE.N, supported by Chinese tech giant Tencent Holdings Ltd (0700.HK) and the Japanese SoftBank Group Corp (9984.T), raised $ 2.12 billion in its U.S. listing on Thursday, the 18th Chinese company to list there this year.

The pricing for KE, widely known as Beike, came just three days after Treasury Secretary Steven Mnuchin said Chinese companies that do not meet U.S. accounting standards will be phased out by the end of 2021.

CEO Stanley Peng told Reuters on Thursday Beike had planned to list for two years and saw the removal threat as minimal.

Beike will be followed by Xpeng, a manufacturer of electronic cars, which has filed for an IPO. Lufax, an online wealth management firm, has filed a confidential application for a US listing, a person with direct knowledge of the deal told Reuters. The company did not respond to a request for comment.

An asset manager in Hong Kong who bought Beike and Li Auto Inc’s $ 1.1 billion IPO in the LI.O two weeks ago said tensions from the US-China did not whet his appetite.

“The only things that will worry me will be if US pension funds are banned from investing in Chinese IPOs like when China and the US are in conflict,” said the fund manager, who asked not to be named because he is not authorized to speak to the media.

Financial advisers to list candidates said some companies were not deterred from the US list because the rules have yet to be implemented and there is potential for “co-auditing” in the United States.

In a potential concession, the inspection may be carried out by a US parent company of the China-based branch, tasks with the inspection of the Chinese company. Still, new businesses would have to meet immediately, officials said over the weekend.

(This story corrects the surname of Elder, not Brown, in third paragraph)