May 26, 2022

shares registered in the USA Chinese companies, especially tech companies, are booming this morning. Trading during the day was triggered by comments from Chinese government spokesman Liu He, who spoke about both Chinese stocks listed overseas and the pace of reforms in the country’s economy.

Yesterday, the exchange noted an increase in sales in Chinese stocks in recent days; Uncertainty about the Chinese government’s COVID-19 policy, a growing rapprochement with the exiled Russian government, rapid regulation of big tech companies, and a shift in the government’s view of its economy – attempts at “common prosperity” have cornered investors.

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Today, however, in light of the ruling, Chinese companies are doing well, at least in terms of valuation. For example, the NASDAQ Golden Dragon China Index, made up of 93 different US-listed Chinese companies, is up about 18% this morning. Alibaba and Baidu are up 17% each, Bilibili stock is up 30%, and so on.

What is changing?

The comments in question – here in Chinese – indicate that “the Chinese government continues to support the listing of various companies overseas,” according to CNBC’s translation.

This is a relief for holders of foreign shares in Chinese companies, given market fears that companies may be forced to delist. The paper also notes that regulatory work needs to be done quickly, which is much more welcome news. Other topics were mentioned, including monetary policy, the country’s real estate market and Hong Kong.

That the Chinese government can move away from the position it took last year when it was busy chasing business models, labor practices, data policies and sources of capital for Chinese tech companies is incredibly important. Not only for companies that are directly affected by the news of the day, but also for startups that want to build in the country.

Recall that yesterday we saw the first signs that the pace of venture capital investment in China is slowing down in the first quarter. No single factor can take full responsibility for this change. But many have contributed, and if China is ready to open up more exit opportunities—foreign IPOs—and also create more regulatory space for companies, well, that will be more startups. A good recipe for activity.

The Chinese venture capital market once rivaled the venture capital market in the United States in terms of activity. Those days have already passed years. But leading position or not, there are many people who want to produce in China, so we follow their destiny.

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