April 29, 2021
Chinese companies allowed to raise funds in the US market saw those funds jump by 440% in the first few months of 2021. This staggering $11 billion raised on the New York Stock exchange and Nasdaq is a record for Chinese companies. The biggest winners RLX Technology and Tuya raised the funds via a combination of IPOs, follow-on share sales, and bond issuance, but another 20 additional companies contributed to the record breaking quarter. This all came as the NYSE delisted three Chinese telecom companies with potential ties to China’s military. This came off the back of China’s 18% annual GDP growth. While stocks have stalled on mainland China, higher P/E ratios in the US (32 in the US vs 19 in China) are showing value in Chinese companies.
FINSUM + Magnifi: One would expect some normalization of cross-country P/E ratios, but this deviation is a huge opportunity for investors. If more Chinese companies will benefit from US P/E ratios expect a lot more funds to be generated.
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