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More re-listings by Chinese technology firms to come

By Vera Ye | May 8, 2015, Friday | Online Edition

China’s stock bourses are expected to see a wave of re-listings by Chinese technology companies that were previously traded on the Wall Street, driven by booming valuations of domestic markets, industry experts said.

“Just a few years after Chinese technology companies flocked to sell share in New York, the trend is reversing as a growing number of them are seeking to take their listings home in the next few years,” said Qian Xuefeng, founding partner and chairman of the New Access Capital, a Shanghai-based corporate finance adviser.

“Stunning performances of their peers on domestic exchanges, especially those on the ChiNext board, are one of the main drivers,” Qian said today at the Shanghai Investing Summit jointly organized by Darden School of Business of the University of Virginia and Antai College of Economics & Management of Shanghai Jiao Tong University.

ChiNext board, China’s Nasdaq-style bourse for start-ups, have soared more than 100 percent this year, with the average price-to-earnings ratio at around 100. That compared with a ratio of 30 of the Nasdaq stock market. Beijing Baofeng Technology Co Ltd, a streaming and online video company, has seen its share price gain by daily limit for 31 trading days and skyrocket 25.6 times since its debut in Shenzhen late March.

Chinese digital media group Focus Media, which has already delisted itself from the Nasdaq stock exchange in 2013, is planning to list on the A-share market through a reverse merger as soon as next month, while Jumei International Holding Ltd, a Chinese online retailer of beauty products that went public in the US last year, is also considering returning to domestic stock market.

Qian told Shanghai Daily on the sideline of the summit that Shanghai’s pilot free trade zone could become a platform for overseas listed companies to return to China’s capital market.

The State Council, China’s Cabinet, said on Thursday that China would introduce policies to encourage Internet companies to list on domestic exchanges.

Hu Ruyin, chief economist of Shanghai Stock Exchange, said during the summit that the ongoing reform of initial public offering system would also pave the way for technology companies to list home as a registration-based listing system would scrap the requirement of three-year profit record, which has been one of major hurdles for start-ups to go public domestically.

 

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