Chinese new stocks a gamble

Back in December 2018, as much as 33 Chinese companies listed on the New York Stock Exchange and Nasdaq  including Tencent Music  Entertainment, video platform iQiyi and electric car maker Nio as the listing topped $9bn.

Luckin Coffee is Chinese equivalent to Starbucks, has joined the elite ranks of privately held Chinese companies with mega valuations, last week secured a $2.9bn value after a capital raising round led by Black Rock.

Luckin is now looking to enlarge that by securing a stock market listing in the US, following the ranks of several Chinese companies who are lining up alongside American peers, the likes of Palantir, slack and Uber to offer shares to the public this year.

In the last month, the much hyped market debut of Lyft has not gone as well as bankers had hoped with shared in the ride-hailing form down about 16  per cent from the initial public offering price in New York.

A negative mood also seems to be spreading over Didi Chuxing, the Beijing-based company that bought Uber’s China operation in 2016 as shares in the grey market have changed hands at big discounts, also Meituan-Dianping, an internet food delivery company have not fared well either, down about one-fifth from its IPO price in Hong Kong  and Xiaomi, a handset manufacturer also down more than 30 per cent.

With all this in mind, it seems unlikely that public markets will be much more hospitable to ByteDance, owner of TikTok video-sharing platform. Last year even the biggest Chinese tech companies including Alibaba and Tencent, saw their own share prices come under pressure.