NEW YORK - Nasdaq Inc is cracking down on initial public offerings of small Chinese companies by tightening restrictions and slowing down their approval, according to regulatory filings, corporate executives and investment bankers.
Digital influencer incubator Ruhnn Holding Ltd, after-school education provider Puxin Ltd, and pet product manufacturer Dogness International Corp are other examples of Chinese companies that listed on Nasdaq in the last two years with more investors from China snapping up their shares than from the United states, according to sources close to the companies. Ruhnn, Puxin, and Dogness did not respond to requests for comment.
US-listed shares of Chinese companies fell sharply on Friday following reports that the White House was considering delisting Chinese companies from US stock exchanges. A US Treasury official said on Saturday that US President Donald Trump's administration was not considering blocking Chinese companies from listing shares on US stock exchanges"at this time".
"Nasdaq's concern about low liquidity and high volatility in the marketplace brought about by such Chinese IPOs has become very obvious since mid-2018," said Ralph De Martino, chair of US law firm Schiff Hardin LLP's Asia practice, which advises Chinese companies on their IPOs. Unlike Nasdaq, the Chinese stock market has strict listing criteria that prevent some loss-making companies from going public. The geographically adjacent Hong Kong stock exchange is also viewed by IPO hopefuls as more strict compared to Nasdaq.