There’s no place like home.
China will soon witness a wave of Chinese firms listed in the U.S. coming back home. In anticipation of this trend, the country has put in place funding schemes that will finance their repatriation.
According to Reuters, Chinese technology companies are planning to abandon their U.S. listing in favor of their home country, partly due to the high share valuations, and ahead of the government’s plan to disallow foreign investors from taking controlling stakes in protected tech firms.
Investment bank China Renaissance along with Citic Securities are raising money to help these companies delist in the U.S. and list at home, Reuters said. Shengjing Management Consulting has also introduced a fund-of-funds to bring back around 100 Chinese firms to China.
Aside from the financial aid, the strong performance of China’s Nasdaq-type index is irresistible. Reuters wrote:
“The numbers are hard to resist. China’s tech-driven ChiNext composite index has gained nearly 180 percent this year, eclipsing the 30 percent rise in the Nasdaq OMX China Technology Index that tracks offshore listed mainland firms .
“Firms listed on the Nasdaq index get an average share price equal to 11 times their earnings. On ChiNext, they get 133 times. There’s a debate over which ratio is more accurate, but Chinese executives blame U.S. ignorance of China.”
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