Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Saturday, Feb 24, 2024

Chinese companies find Swiss listing haven amid U.S. pressure

Chinese companies find Swiss listing haven amid U.S. pressure

Chinese companies have found a new foreign listing venue in Switzerland as mounting regulatory pressure from the U.S. forces many to reassess their ties to Wall Street.
Since the new Swiss listing mechanism kicked off five months ago, nine mainland Chinese enterprises have gone public in Zurich raising a total of $3.15 billion, far exceeding the amount raised in the American equity market in 2022.

The latest to list on the Swiss Exchange, or SIX, was Jiangsu Eastern Shenghong, a private chemical product manufacturer, on Wednesday. The company raised $718 million in the Swiss market's largest initial public offering of 2022.

"This is a crucial step in the company's move toward international development," Jiangsu Eastern said in a statement issued following its Swiss listing. The company said it intended to enhance its production capacity and "entice global investors and accumulate capital for global expansion."

Under a "China-Switzerland Stock Connect" that took effect around the end of July, companies traded on the exchanges in either country could choose to seek secondary listings on the other side by issuing global depositary receipts, or GDRs. So far, Chinese companies including lithium battery producers Gotion High-Tech and Sunwoda Electronic, medical device maker Lepu Medical Technology Beijing, and hand tool manufacturer Hangzhou GreatStar Industrial have listed in SIX.

No European-listed companies have used the system to list either in Shanghai or Shenzhen to date.

The Swiss version of the stock connect built upon an arrangement between China and the U.K. that commenced in 2019, but which remains stagnant with only five Chinese listings in London so far. China is also discussing a similar arrangement with Germany.

Ringo Choi, Asia-Pacific IPO leader at EY, told Nikkei Asia that one important reason for Chinese companies' interest in listing on SIX is that Swiss authorities allow them to use China-based auditors.

While U.S. regulators have cracked down on Chinese companies and said they require inspection of Chinese audits for those publicly traded in America, Swiss and Chinese authorities have agreed mutual recognition of their respective accounting rules and supervisory frameworks.

According to research by Nikkei Asia, at least 30 mainland companies traded in Shanghai and Shenzhen have disclosed their intentions to seek a listing on SIX.

Although the imminent risk for some 173 U.S.-listed Chinese companies that faced the threat of being delisted has receded somewhat after the U.S. Public Company Accounting Oversight Board announced in mid-December that its maiden inspection carried out in Hong Kong was successful, Washington is clear on keeping up the heat against Beijing on the audit issue. "Cranking up the pressure now will help hold China's feet to the fire," said Erica Williams, the chair of the PCAOB.

Jane Moir, head of research at the Asian Corporate Governance Association, presumes the U.S. is ready to shift gears against China anytime. "It's quite clear from the statement the U.S. made that it's only good for now," she told Nikkei Asia. If things do not proceed smoothly in the future, the U.S. regulator could "put these companies back on the list and they get delisted."

Under such pressure, more Chinese companies have diverted away from the U.S. Only 16 went public in 2022 compared with 42 the year before, and the total amount of funds raised dropped by 96% to $540 million, according to an estimate by Deloitte.

"The drop in 2022 was mainly because of the U.S.-China relationship," said EY's Choi. While there are Chinese companies still attracted to the U.S. market for its size, liquidity and diversity of investors, he anticipates that the IPO trend "depends on the relationship."

Choi said, "Zurich is more stable and politically neutral," which is probably why the SIX has become appealing to a number of Chinese companies.

Beijing seems to view the rising interest in Swiss listings as an opportunity as well. Fang Xinghai, vice-chairman in charge of international affairs at the China Securities Regulatory Commission, told a financial forum in Shanghai last month that the regulator fully supports expanding the "healthy development of GDRs" and continues to encourage Chinese companies to seek listings abroad, while hoping to attract foreign enterprises to do the same in China.

Nana Li, Asia-Pacific head of sustainability and ESG at London-based Impax Asset Management, said Swiss or any other European markets could not be a substitute for New York or Nasdaq. "But they are also giving pressure to the U.S. to make concessions," Li said.

Related Articles

Hong Kong News
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.