Chinese stocks ‘bleed’ in US – $ 600 billion in losses in 2021

Chinese stocks traded in the US have always been a double-edged sword for investors, with their many years of growth leading to an inevitable end.

According to marketwatch, after hundreds of rough offers in the US markets for new companies based in China and huge potential for either growth or complete collapse, the market for these shares collapsed in 2021.

“Valuations have fallen sharply. There have been no public registrations in recent months. And there have been several transitional private transactions,” said Jesse Fried, a professor at Harvard Law School.

Matthew Kennedy, Senior Strategic Advisor at Renaissance Capital, a publicly traded research company that also has two publicly traded ETFs, said there were 30 Chinese-based IPOs in the first half of 2021 and just four the second semester, before the registration window closes. As he said, this year the 34 Chinese companies raised $ 12.6 billion from their public registration in the US, compared to 30 agreements in 2020 that raised $ 11.7 billion, excluding SPACs (special purpose acquisition companies).

But the results for American investors who bought these shares were not so rosy.

“Even if the Chinese government and the US government gave the green light to these companies, the average return on public registrations of China-based companies in 2021 in the US is negative at -42%. Only 12% are trading positively. “, he pointed out.

It is not only the “beginners” who have been affected by this development. In May, according to the US-China Economic and Security Committee, there were 248 Chinese companies listed on US stock exchanges with a total market capitalization of 2.1 trillion. dollars. This value has dropped sharply, to about 1.5 trillion. dollars, cutting $ 600 billion from US markets.

The decline has left many US investors holding Chinese stocks in hopes of recovering or offsetting other taxable gains if sold in 2021.

But a new U.S. law requiring more disclosures from Chinese company auditors, coupled with Chinese regulators pressuring them to enter China instead of US markets, appears to be driving the Chinese stock market to a US ignominious end.

“China does not hold these securities, American investors do,” said Brendan Ahern, chief investment officer at Krane Funds Advisors, which has a number of China-based ETFs. “This savings is in jeopardy.”