In This Article:
(Repeats item first published late on Monday)
* Bestbond now looking at HK more closely as IPO destination
* All candidate firms for U.S. IPOs now worried -banker
* The threat may long depress valuations of US-listed China firms
By Samuel Shen and Josh Horwitz
SHANGHAI, Sept 30 (Reuters) - Bestbond, a Chinese apartment rental company, had been planning on a Nasdaq flotation in one to two years but as U.S.-China trade tensions racheted higher, the Hong Kong stock exchange emerged as a possible candidate. Now, it's firmly on the table.
"We're having second thoughts," CFO Wang Jia told Reuters, adding that Hong Kong, despite being beset with political unrest, had become more attractive after news emerged on Friday that U.S. President Donald Trump's administration was looking at delisting Chinese companies from U.S. bourses.
Bestbond, based in Nanjing, eastern China, still prefers Nasdaq as it is a higher profile, more liquid market that would likely offer better valuations, but the company cannot afford to have its eggs in just one basket, Wang said.
While a U.S. Treasury official has said Trump's administration was not considering blocking Chinese companies from U.S. listings "at this time", the possibility it may do so has resulted in much handwringing by mainland firms that had been looking at a U.S. IPO.
"Too many calls. Every client is worried," said Terence Lin, CEO of World Financial Holding Group, a boutique investment bank which helps Chinese companies with Nasdaq listings.
Two sources said the U.S. move was part of a broader idea to limit U.S. investment in Chinese firms, while one source has said that it is motivated by security concerns.
Lin believes, however, that Trump's threat would be extremely difficult to implement legally and is merely a negotiation tactic in the rapidly escalating trade war between the world's two biggest economies.
Even if difficult to execute, Trump's threats are bound to hurt Chinese firms already listed in the United States as well as providing bourses such as the Hong Kong and London stock exchanges with a fresh and lucrative opportunity to woo Chinese firms, industry participants said.
"The political uncertainty could exert pressure on the valuations and the liquidity of U.S.-listed Chinese stocks for a long long time," said Frederick Shen, partner at Chinese venture capital firm New Vision Capital.
Shen said he's increasingly taking his portfolio tech startups to list on China's newly launched STAR Market instead of the Nasdaq.
According to regulatory filings, corporate executives and bankers, Nasdaq Inc is cracking down on IPOs of small Chinese companies by tightening restrictions and slowing down their approval.