Main topic: Chinese startups could miss American know-how and intangible benefits due to restrictions on U.S. venture capital flowing to China.
Key points:
1. President Biden signed an executive order to block American dollars from funding Chinese companies developing AI, semiconductor, and quantum computing technologies with military applications.
2. The proposed regulations would also restrict Chinese startups' access to intangible benefits offered by U.S. tech giants and venture capital firms, such as managerial assistance and access to talent networks.
3. While the restrictions may impact Chinese startups' access to American expertise, some investors believe that China's investment ecosystem has been attracting investors from other countries who can provide similar benefits.
UK-based chip designer Arm Holdings has filed for an initial public offering (IPO) to list shares on the Nasdaq under the ticker symbol "ARM," with a goal of raising $8 billion to $10 billion at a valuation of $60 billion to $70 billion, potentially making it the largest IPO of the year. Arm licenses its chip designs used in low-power-consuming devices like smartphones and tablets to customers including Amazon, Intel, Nvidia, and Apple. However, there are risks related to China's influence and the potential impact of AI and machine learning on Arm's designs.
China's securities regulator will gradually restrict initial public offerings in order to minimize market disruptions, potentially impeding the country's efforts to improve its industrial structure and impacting startups' access to capital markets.
China has cut the stamp duty on stock trades and plans to slow the pace of initial public offerings in an effort to boost investor confidence and stimulate the capital markets.
Chinese stocks, including Alibaba and JD.com, experienced a rally after the government announced plans to reduce trading taxes and implement measures to boost capital markets.
Shares of Chinese e-commerce giants Alibaba and JD.com surged after the Chinese government announced measures to boost the country's capital markets, including halving the stamp duty on securities transactions.
Chinese stocks, including Alibaba, rise for a second day following stimulus measures from Beijing, but long-term gains may be challenging due to concerns over China's economy.
Semiconductor giant Arm Holdings is set to go public in an initial public offering (IPO), offering investors a chance to invest in a market-defining technology company that plays a crucial role in the computing industry, with its microprocessor technology found in various devices including smartphones, tablets, smart TVs, and cars. The IPO is expected to have a reasonable initial price, making it an attractive opportunity for investors.
Despite efforts by the U.S. and other countries to reduce reliance on Chinese supply chains, Chinese companies have successfully expanded their presence in key markets such as cutting-edge materials and electric vehicles, making it difficult for countries to ensure their economic security.
U.S. investors are eagerly anticipating several upcoming IPOs in the coming months, including Arm Holdings, Instacart, Klaviyo, and VNG, as they hope to capitalize on the recent rally in equity markets.
Chinese internet stocks, such as Alibaba (BABA), JD.com (JD), and Baidu (BIDU), have faced challenges this year due to the stalled Chinese economy, but their low valuations and AI capabilities present potential opportunities for investors. Despite their current struggles, analysts remain optimistic about the long-term prospects of these stocks, with JD.com expected to have the highest upside potential of over 80%.
China-focused investment firms have struggled to generate returns for their investors, with only four U.S. dollar-denominated venture capital funds established between 2015 and 2020 able to return all the money invested, reflecting a lack of IPOs and the need for alternative exit strategies such as mergers and acquisitions or general partner-led deals.
Several Southeast Asian companies are considering listing in the United States for their initial public offerings (IPOs), taking advantage of strong investor appetite for emerging market growth in the absence of Chinese stock offerings.
The IPO market shows signs of revival with the success of Instacart and Arm IPOs, indicating that investors still have an appetite for stocks.
Alibaba is planning to list its logistics unit Cainiao on the Hong Kong Stock Exchange as part of a major restructuring, with Alibaba retaining more than 50% of Cainiao's shares after the spinoff.
Alibaba's Cainiao has filed for a US$1 billion IPO in Hong Kong, potentially becoming the second-largest listing of 2023 and testing the appetite for new listings in the region.
Shares of Alibaba, XPeng, and other U.S.-listed Chinese stocks are rising following Beijing's proposal to relax regulations on cross-border investment.
The global market for initial public offerings (IPOs) is showing signs of recovery after an 18-month slump, with emerging markets accounting for a significant share of the money raised and number of IPOs, driven by economic growth and increased interest from investors in local and regional companies; however, major IPO markets such as the US, Europe, and the UK have struggled this year due to factors such as high interest rates, regulatory restrictions, and reduced investor appetite for risky bets.
