Chinese companies that went public in the US this year have tumbled 34% on average during Beijing's crackdown on big business
- Chinese stocks that went public in the US in 2021 have been battered by Beijing's crackdown.
- Companies listing in 2021 have fallen an average of 34%, according to data company FactSet.
- One strategist said the drop could be a buying opportunity, yet another said no company appears safe.
Shares in Chinese or Hong Kong companies that listed on US exchanges in 2021 had fallen 34% on average as of Monday's market close, new data has shown, in a sign of how Beijing's crackdown on big business has spooked investors.
The 33.8% average drop compares to an average fall of 2.7% for all companies that held US initial public offerings in 2021, according to figures provided to Insider by financial data company FactSet.
As of Monday, 38 out of the 49 Chinese and Hong Kong companies that listed in the US in 2021 had seen their stocks fall. Chinese companies that went public in the US in 2020 have also been hard hit, falling an average of 14.1% since their listing date as of Monday's close.
The Chinese government has tightened its grip on big companies - especially in the technology and education sectors - in a series of interventions that have shaken foreign investors' confidence in the country.
Beijing swooped on China's biggest ride-hailing app, Didi Chuxing, just days after it raised $4.4 billion on the New York Stock exchange in a June 30 listing. It launched a review into its use of data and banned it from app stores, causing the stock to slump from more than $16 at the end of June to as low as $8 at the end of July.
The crackdown has put institutional investors off Chinese companies in general, with the country's CSI 300 stock index down more than 7% in 2021, compared to the US S&P 500's 20% gain.
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"Many investors are completely avoiding Chinese stocks, as no company appears safe from a Beijing crackdown," Edward Moya, chief market analyst at trading platform Oanda, told Insider.
Yet high levels of volatility are part of the picture when investing in both IPOs and emerging market companies, said Fahad Kamal, chief investment officer at Societe Generale's private bank Kleinwort Hambros.
He told Insider the sharp drop in prices could be seen as an opportunity, given the potential of the Chinese economy over the next decade. "It is just absurdly impossible to ignore," he said. "I think it would be shortsighted to not have some emerging markets in our portfolio."
Some investors appear to have warmed to Chinese stocks again in recent weeks, with Hong Kong's Hang Seng Tech Index up around 14% since falling to a 14-month low on August 20, according to Bloomberg data.
Retail investors have been keen to buy the dip in US-listed Chinese companies, according to data company Vanda Research. It said amateur investors bought more than $400 million of US-listed Chinese stocks last week, with Alibaba a favorite.
Yet big risks remain for investors - and there is uncertainty about the future of Chinese IPOs in the US.
Beijing has proposed new rules that would make companies submit to strict cybersecurity checks before listing abroad and could even ban big tech IPOs in the US altogether, reports have said. The US Securities and Exchange Commission is also tightening up its disclosure requirements for Chinese companies, according to a Reuters report.
"It doesn't seem optimal for a Chinese company to want to list in the US anymore," Moya said.