Goldman Sachs: Our Chinese IPO Clients May Opt Out Of Wall Street

Half of Goldman Sachs list of Chinese firms pursuing initial public offerings (IPOs) in the US are considering shifting their listings to Hong Kong, amplifying a trend of firms seeking to raise funds closer to home, a top banker told Chad Bray of the South China Morning Post (SCMP).

Photo Insert: Could the trade war result in China IPOs pulling out of Wall Street?

Increased geopolitical tensions between the US and China, combined with regulatory tightening by both Beijing and Washington this summer and weaker institutional investor sentiment for American listings by Chinese firms, is tilting the consideration in favor of the Hong Kong stock exchange, said Iain Drayton, co-head of investment banking for Asia excluding Japan.

“While the US will continue to be very attractive for Chinese companies, due to all of these factors, Hong Kong stands to benefit and already has,” Drayton, who is based in Hong Kong, said in an interview with the Post.

“The trend will continue.” Hong Kong ranked third globally for new stock offerings and secondary listings this year through October 29, handling a total of $38.02 billion in proceeds, according to financial data provider Refinitiv. Nasdaq topped the league table with $76.6 billion, followed by the New York Stock Exchange (NYSE) with $52.2 billion.

The Shanghai Stock Exchange and its Star Market ranked a close fourth with $36.9 billion in proceeds. The Star Market is expected to host the biggest IPO globally this year when Syngenta Group, the Swiss agrichemicals giant owned by state-backed China National Chemical Corp. (ChemChina), goes public.

Goldman climbed one rung to fourth in Asia ex-Japan equity offerings this year through last week, garnering a 6.4 percent share of the $332 billion of proceeds credited to deal managers, according to Bloomberg data. Citic Securities, Morgan Stanley, and China International Capital Corp led the league table.

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