The number of China-based companies that rushed into the U.S. stock market hit a 10-year high in 2020, even as several others were removed, according to a study by the University of Florida.
Political commentator Li Linyi said the Chinese regime wants to raise capital in the United States through these companies to support its technology and military.
Several big companies were delisted by the New York Stock Exchange (NYSE). More were removed by index providers including MSCI, FTSE Russell, and S&P Dow Jones Indices, in response to the ban on investment in Chinese regime military-owned or -controlled companies.
However, the threat of shutdown has not dampened the appetite of Chinese companies to list on U.S. exchanges.
In 2020, 30 companies came to the United States to complete an initial public offering (IPO), the highest number since 2011, raising an estimated $12.1 billion, the highest amount since 2014.
Hony Capital
The China-focused Hony Capital seeks to raise $300 million to apply for listing a special purpose acquisition company on the Nasdaq.The company was launched in 2003 by Legend Holdings, better known as computer maker Lenovo, and invests in areas like pharmaceutical and health care and consumer products.
Guo was the former general manager of the Hony Horizon Fund, founded by Hony Capital on Jan. 31, 2018.
At the end of the year, the Horizon Fund completed the first mixed fund subscription—Hony Horizon SOE transformation and upgrading hybrid securities investment fund.
Guo explained the new fund with the focus on SOE was to pursue long-term appreciation from stable investments. He expected state-invested 5G infrastructure and the military-related industry to perform strongly.
As a leading equity investment institution, Hony Capital has assets under management exceeding 50 billion yuan ($7.65 billion), but the return on invested capital is only seven percent, according to his analysis.
Privileged Backgrounds
Hony’s parent company Legend Holdings was funded by the Chinese Academy of Sciences (CAS).After Chinese leader Xi Jinping’s visit in 2014, CAS launched the Pioneering Initiative, a talent-recruitment plan for developing CAS as the nation’s science and technology think tank.
Listed Companies in Sensitive Areas
Highlighted in the regime’s 14th five-year plan, the party encourages the acceleration and development of technology frontier fields and digital economy industries.Based on the data it provided, eight newcomers focused on biological breeding, AI tech, cloud computing, and augmented reality.
Shanghai-based biotech company I-Mab Biopharma raised $104 million in January, and cancer diagnostic provider AnPac Bio-Medical Science raised $16 million. Later in June, another two precision oncology and cancer detection companies, Burning Rock Biotech and Genetron, raised $223 million and $256 million respectively on their debuts.
Of the two in cloud computing, in May Kingsoft’s Cloud raised $510 million in IPO, and Agora, which provided a development kit to build real-time voice and video, raised $350 million in June.
Leading audio live-streaming service Lizhi snagged $45 million by offering 4.1 million American Depository Shares in January. Lizhi is famous for its user-generated content based on AI technology.
The holographic augmented reality software company, WIMI Hologram Cloud, raised $26 million on the Nasdaq global market in April.
Political commentator Li Linyi suggests capital is driving the push to Wall Street—the Chinese regime wants to raise money from the United States to support its technology and military-related areas.
Although the United States’ Holding Foreign Companies Accountable Act (HCFA) targets military-linked or state-controlled companies listed on U.S. stock exchanges, it cannot deter such companies from looking to Wall Street, Li said.
Once they go public in the United States, they are able to raise money, at least during the three years before being removed. Li explained that HCFA removes Chinese companies from the U.S. exchanges if they fail to comply with American auditing standards three years in a row.