Source: Global Times Published: 2024-08-12

By Ma Jingjing

Chinese firms' enthusiasm to go public overseas is increasing, with about 120 companies having filed applications for IPOs or secondary listings in foreign stock markets so far in 2024, exceeding last year's total, official data showed.

Analysts said the trend shows that Chinese financial regulators are becoming more open to overseas listings, which will help Chinese companies expand their financing channels and share with global investors the dividends of China's high-quality development.

According to the China Securities Regulatory Commission (CSRC), 119 companies have filed applications for IPOs or secondary listings in other markets. These companies come from a wide range of sectors including autonomous driving, artificial intelligence and biotechnology, and they applied for listings in markets including Hong Kong Exchanges and Clearing and the NASDAQ Stock Market.

Policy support and Chinese enterprises' increased financing needs to expand investment in research and development and open more production lines are contributing to companies' growing interest to be listed in foreign capital markets, Dong Shaopeng, a senior research fellow with the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Monday.

Chinese financial regulators have vowed to boost the two-way opening-up of China's capital market, which will further ease channels for mainland companies to raise funds in other markets. In April, the State Council, the cabinet, issued a new guideline on the capital market, saying it would facilitate channels for mainland companies to list in overseas markets.

Tian Xuan, a vice dean of the Tsinghua University PBC School of Finance, said this underscores China's commitment to seek development while boosting opening-up. He said domestic companies' applications for overseas IPOs may pick up speed, the process will be more regulated, and the types of companies and listing models will be more diversified.

As of June, 245 Chinese companies had floated their shares on NASDAQ, with a total market capitalization of $497.4 billion, Chris Hao, China chief representative of NASDAQ, said at a recent media event, the Shanghai Securities News reported on Monday.

'Chinese sci-tech firms grew rapidly in China over recent years thanks to the country's high-quality development and the development of new quality productive forces. As a result, there are more small tech firms filing IPO applications,' Tan Xiaofen, a professor at the School of Economics and Management at Beihang University, told the Global Times on Monday.

It's widely expected that the US Federal Reserve may soon cut interest rates, which will be positive for stock markets globally, Tan said.

To support companies raising funds overseas, Chinese government agencies have formulated policies. The authorities will support prominent, creditworthy companies that promote high-quality development in the real economy by allowing them to issue medium- to long-term foreign debt, the National Development and Reform Commission, the country's top economic planner, announced in late July.

Nanshan district in Shenzhen, South China's Guangdong Province, will grant incentives of up to 4 million yuan ($560,000) to enterprises that are listed in overseas markets, which can be used for expanding enterprises' businesses or incentives for executives, according to a circular on the local government website in March.

The Chinese economy remains resilient, with a confluence of technological and industrial advancement nurturing new growth drivers, Tan said, expressing optimism for the long-term investment value of China's capital market despite temporary challenges.

The regulatory authorities have introduced policies and reform measures this year to improve the capital market regulatory system, comprehensively deepen capital market reform and promote high-quality market development. They are expected to invigorate the capital market and boost investor confidence to stabilize long-run expectations, Dong said.