Chinese stocks are not as hot in the U.S. as they used to be. In fact, since 2019, over 80 Chinese companies have delisted from U.S. exchanges, and the remaining 275 represent less than 2% of the total value of the NYSE (ICE) and Nasdaq (NDAQ). While Chinese IPOs have not disappeared, most are small, speculative offerings rather than the blockbuster listings of past years. Indeed, some barely even meet listing standards, which raises red flags about their legitimacy.
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This represents a dramatic shift from the 2010s, when Chinese IPOs, such as Alibaba’s (BABA) $25 billion debut, made headlines and turned co-founder Jack Ma into an international figure. However, things have changed, and no Chinese state-owned enterprises are currently listed on U.S. exchanges following the delisting of companies like China Mobile in 2021 as a result of U.S. sanctions. At the same time, U.S. politicians are actively pushing to reduce American capital flowing into Chinese firms due to national security concerns and human rights abuses.
It also doesn’t help that some Chinese stocks, such as Luckin Coffee, saw their share prices collapse and were ultimately delisted for fraud. Meanwhile, others left voluntarily rather than face U.S. audits, which may suggest that they were cooking their books as well in order to enrich insiders. Nevertheless, even with these obstacles, Chinese companies are able to find other routes, with investment banks like JPMorgan (JPM) and Bank of America (BAC) helping them list in places like Hong Kong. Even major names like Alibaba have begun shifting their attention toward Hong Kong listings in order to prepare for a future where access to U.S. capital may no longer be guaranteed.
Which Stock Is the Better Buy?
Turning to Wall Street, out of the stocks mentioned above, analysts think that BABA stock has the most room to run. In fact, BABA’s average price target of $166 per share implies more than 47% upside potential. On the other hand, analysts expect the least from NDAQ stock, as its average price target of $85.46 equates to a loss of 1%.
