Chinese autonomous driving company WeRide listed on the Nasdaq on Friday, Oct. 25, 2024.
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BEIJING — Chinese IPOs in the U.S. and Hong Kong are set to increase next year, analysts said, as some high-profile listings outside the mainland this year raise investor optimism over profitable exits.
Chinese autonomous driving company WeRide listed on the Nasdaq Friday with shares rising nearly 6.8%. Earlier this month, Chinese robotaxi operator Pony.ai also filed paperwork to list on the Nasdaq. Both companies have long aimed to go public.
Few large China-based companies have listed in New York since the Didi IPO in the summer of 2021 increased scrutiny by U.S. and Chinese regulators on such listings. The Chinese ride-hailing company was forced to temporarily suspend new user registrations, and got delisted in less than a year.
U.S. and Chinese authorities have since clarified the process for a China-based company to go public in New York. But geopolitics and market changes have substantially reduced U.S. IPOs of Chinese businesses.
“After a couple of slow years, we generally expect the IPO market to revive in 2025, bolstered by interest rate decreases and (to some extent) the conclusion of the U.S. presidential election,” Marcia Ellis, Hong Kong-based global co-chair of private equity practice, Morrison Foerster, said in an email.
“While there is a market perception of regulatory issues between the U.S. and China as being problematic, many of the issues driving this perception have been solved,” she said.
“Chinese companies are becoming increasingly interested in getting listed in Hong Kong or New York, due to difficulty in getting listed in Mainland China and pressure from shareholders to quickly achieve an exit.”
This year, as many as 42 companies have gone public on the Hong Kong Stock Exchange, and there were 96 IPO applications pending listing or under processing as of Sept. 30, according to the exchange’s website.
Last week, Horizon Robotics — a Chinese artificial intelligence and auto chip developer — and state-owned bottled water company CR Beverage went public in Hong Kong.
The two were the exchange’s largest IPOs of the year, excluding listings of companies that also trade in the mainland, according to Renaissance Capital, which tracks global IPOs. The firm noted that Chinese delivery giant SF Express is planning for a Hong Kong IPO next month, while Chinese automaker Chery aims for one next year.
Still, the overall pace of Hong Kong IPOs this year is slightly slower than expected, George Chan, global IPO leader at EY, told CNBC in an interview earlier this month.
He said the fourth quarter is generally not a good period for listings and expects most companies to wait until at least February. In his conversations with early stage investors, “they are very optimistic about next year” and are preparing companies for IPOs, Chan said.
The planned listings are generally life sciences, tech or consumer companies, he said.
Hong Kong, then New York
Investor sentiment on Chinese stocks has improved over the last few weeks thanks to high-level stimulus announcements. Lower interest rates also make stocks more attractive than bonds. The Hang Seng Index has surged over 20% so far this year after four straight years of declines.
Many Chinese companies that list in Hong Kong also see it as a way to test investors’ appetite for an IPO in another country, said Reuben Lai, vice president, private capital, Greater China at Preqin.
“Geopolitical tensions make Hong Kong a preferred market,” Ellis said, “but the depth and breadth of US capital markets still make many companies seriously consider New York, especially for those that focus on advanced technology and are not yet profitable, who sometimes believe that their equity stories will be better received by U.S. investors.”
Just over half of IPOs on U.S. exchanges since 2023 have come from foreign-based companies, a 20-year high, according to EY.
Geely-backed Chinese electric car company Zeekr and Chinese-owned Amer Sports both listed in the U.S. earlier this year, according to EY’s list of major cross-border IPOs.
Chinese electric truck manufacturer Windrose said it intends to list in the U.S. in the first half of 2025, with a dual listing in Europe later that year. The company, which aims to deliver 10,000 trucks by 2027, on Sunday announced it moved its global headquarters to Belgium.
A recovery in Chinese IPOs in the U.S. and Hong Kong can help funds cash out on their early stage investments in startups. The lack of IPOs had reduced the incentive for funds to back startups.
Now, investors are looking at China again, after recently deploying capital to India and the Middle East, Preqin’s Lai said. “I’m definitely seeing a greater potential from now in China whether it’s money coming back, valuation of the companies, exit environment [or] performance of the funds.”
While the pickup in investor activity is far from levels seen in the last two years, the nascent recovery includes someinvestments in consumer products such as milk tea and supermarkets, Lai said.
The founder of the first gold-tracking ETF is still bullish on the commodity two decades later.
“Things are looking good for the rest of this year and for next year,” George Milling-Stanley told CNBC’s “ETF Edge” this week.
The State Street chief gold strategist highlighted demand from both central banks and individual investors in emerging markets, such as India and China, as major tailwinds for the precious metal.
Since the Nov. 5 election, “investors have gone gung-ho on risk-on assets,” Milling-Stanley said. “This is why we’ve seen the stock market go up dramatically, why we’ve seen the cryptocurrencies go up dramatically.”
But the precious metal, and in turn, the GLD ETF, are “starting to claw back some of the lost ground,” Milling-Stanley said.
Since then, investment in gold has shifted away from jewelry and into bullion and ETFs as demand for the precious metal has jumped. Milling-Stanley describes the increased investor demand as a “huge change” to the commodity investment landscape — and to portfolio management as a whole.
Todd Sohn, ETF and technical strategist at Strategas, says GLD brought more investors into gold because of the broader access ETFs can offer.
“No matter what your end game is, GLD allowed you to add something to your portfolio besides an equity and a fixed income instrument, so you can get diversification,” said Sohn.
Since its inception, GLD is up 451%. It is up 29% in 2024.
Ken Griffin, chief executive officer and founder of Citadel Advisors LLC, speaks during an Economic Club of New York event in New York, US, on Thursday, Nov. 21, 2024.
Yuki Iwamura | Bloomberg | Getty Images
Citadel CEO Ken Griffin issued a warning against the steep tariffs President-elect Donald Trump vowed to implement, saying crony capitalism could be a consequence.
“I am gravely concerned that the rise of tariffs puts us on a slippery slope towards crony capitalism,” the billionaire investor said Thursday at the Economic Club of New York.
The Citadel founder thinks domestic companies could enjoy a short-term benefit of having their competitors taken away. Longer term, however, it does more harm to corporate America and the economy as companies lose competitiveness and productivity.
Crony capitalism is an economic system marked by close, mutually advantageous relationships between business leaders and government officials.
“Those same companies that enjoy that momentary sugar rush of having their competitors removed from the battlefield, soon become complacent, soon take for granted their newfound economic superiority, and frankly, they become less competitive on both the world stage and less competitive at meeting the needs of the American consumer,” Griffin said at the event.
Trump made universal tariffs a core tenet of his economic campaign pitch, floating a 20% levy on all imports from all countries with a specifically harsh 60% rate for Chinese goods.
The protectionist trade policy could make production of goods more expensive and raise consumer prices, just as the world recovers from pandemic-era inflation spikes.
“Now you’re going to find the halls of Washington really filled with the special interest groups and the lobbyists as people look for continued higher and higher tariffs to keep away foreign competition, and to protect inefficient American businesses have failed to meet the needs of the American consumer,” Griffin said.
At the same event, Griffin also said that he’s not focused on taking Citadel Securities public in the foreseeable future. Citadel is a market maker founded by Griffin in 2002.
“We’re focused on building the business, on investing in our future. And we do believe that there are benefits to being private during this period of very, very rapid growth,” he said.
Check out the companies making headlines in midday trading. Nvidia — Shares of the chipmaker dipped about 1% in midday trading, after gyrating earlier in the session. Nvidia beat on top and bottom lines for the third quarter, posting adjusted earnings of 81 cents per share on revenue of $35.08 billion. Analysts polled by LSEG had called for earnings of 75 cents per share on $33.16 billion in revenue. Nvidia also gave a better-than-expected forecast for the current quarter. Baidu — U.S. shares of the Chinese search engine fell about 5% after Baidu’s third-quarter revenue declined by 3% compared to the year-ago period . Still, the company posted a 12% increase in its non-online marketing revenue, fueled mostly by growth in its artificial intelligence cloud business. Alphabet — Shares declined 5% on news that the Department of Justice is pushing a federal judge to force Google divest its Chrome internet browser in order to create a more level playing field for competitors in the search industry. That follows a ruling in August that Google has a monopoly in the search market. Snowflake — The data analytics software maker saw shares skyrocket more than 34%, after the company’s better-than-expected third-quarter results . The stock is heading for its best day ever. Snowflake also called for $3.43 billion in fiscal 2025 product revenue, implying 29% growth. CEO Sridhar Ramaswamy said Snowflake is focusing more on saving money. Merus — Shares of the cancer therapeutics company gained nearly 4%. Goldman Sachs initiated coverage of Merus with a buy rating, saying it sees big gains ahead driven by the company’s cancer treatment. Netflix — Shares rose nearly 2% on the heels of Bank of America reiterating its buy rating on the stock and upping its price target to $1,000. The bank cited live events, as well as Netflix’s in-house ad tech platform, as catalysts for growth. Crypto-related stocks — Stocks tied to cryptocurrencies earlier rose after the price of bitcoin crossed $98,000 for the first time , but they fluctuated after Galaxy Digital CEO Michael Novogratz warned that a pullback in bitcoin will come eventually. MicroStrategy was down 1%, reversing its earlier gains, while Coinbase dipped 3%. Miner Mara Holdings gained nearly 10%, while trading platform Robinhood dipped about 1%. BJ’s Wholesale Club — Shares moved 9% higher after the warehouse club’s third-quarter adjusted earnings beat the Street’s estimates. BJ’s also boosted its full-year guidance. The company said it will increase its membership fee and announced plans to repurchase $1 billion shares. PDD Holdings — Shares of the e-commerce giant, which owns Temu, fell 9.7%. PDD missed profit and revenue estimates. — CNBC’s Sean Conlon, Yun Li and Michelle Fox contributed reporting.