China tech companies preparing to return to US stock market: IPO plans despite trade tensions
In the current global economic environment when trade tensions and mistrust in the technology sector between the US and China are constantly increasing, some major China tech companies are planning to list on the US stock market. The move comes at a time when geopolitical tensions and regulatory instability between the two countries are already forcing companies to be cautious.
Walnut Coding: Big plans of a Chinese company in the education sector
Beijing Smart Walnut Education China tech Company, popularly known as “Walnut Coding“, is an ed-tech company that provides coding services to children. The company is now considering bringing its IPO in the US. According to reports, this company can raise around $ 100 million (about Rs 830 crore) from its US IPO.
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Sources say that the move is still under consideration and no final decision has been made public. The company’s major investors include large private equity firms such as KKR & Co. and Hillhouse Investments.China tech
Walnut Coding has declined to comment on the subject.
Other companies also in the fray
Apart from Walnut Coding, several other China tech companies are preparing to approach the US market. These include:
- Shenzhen CloudSky Technologies Co. – a cloud infrastructure company
- Zaihui – a software service platform
- Zhonghe Group – a digital solutions providing company
All these companies are also said to be aiming to raise around $100 million. However, they have not given any official response to this.
Why are Chinese companies attracted to the US market?
The US stock market is still considered the most liquid and professional globally. Companies here:
- Receive higher valuations
- Get access to a large number of global investors
- And also receive higher investment banking fees, which helps companies get more investments
The US market is considered more attractive than alternative markets such as Hong Kong and Shanghai, especially for companies looking for global branding and capital raising possibilities.
Trade tensions and regulatory concerns
However, this trend is being seen at a time when challenges such as the trade war between the US and China, data protection regulations and restrictions on the technology sector are already affecting companies. China tech
Recently, US Treasury Secretary Scott Bessant said that all options to potentially delist Chinese companies from the US stock market are “on the table”. The statement came at a time when new trade talks were taking place between the US and China.
The example of Didi Global
Chinese company Didi Global Inc. is set to make its global debut in the US market in 2021. After the IPO of Chagi Holdings, the Chinese government took strict regulatory action, which led to the company’s delisting from the US stock market. Since then, there has been a sharp decline in the listing of Chinese companies in the US market.China tech
This incident became a warning to many companies that if a balance is not struck between domestic rules and international expectations, the consequences can be dire.
Impact of decline in index
The Nasdaq Golden Dragon China Index, which measures the performance of China tech companies listed in the US, has fallen by 23% since March 17. The US’s leading S&P 500 index has also fallen by about 9% in the same period.
This makes it clear that not only the trade war but also the global economic slowdown and changes in interest rates are playing an important role in this decision.
Chagi Holdings: A ray of hope
However, even amid this negative environment, some companies have raised hope. Recently, tea chain brand Chagi Holdings Limited raised $411 million through a US IPO and recorded a jump of 16% in its first day of trading.
This is a sign that the US market can respond positively despite trade tensions if the company’s fundamentals are strong and the business model appeals to investors.
Personal Opinion: A Bold Move
Conclusion: Is this a sign of a comeback?
Even though uncertainty remains between the US and Chinese governments, the US still remains a large and influential financial market for tech companies.
If these companies succeed in maintaining regulatory transparency and investor confidence, we may see more IPOs of Chinese companies in the US in the near future.
However, both investors and companies should properly analyse the policy risks and market sensitivities before taking any such move.
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