The prices of the stocks of listed China technology companies fell by more than 60% over the past quarter as regulators continue their crackdown on illegal and unfair business practices.
According to Dealogic, prices fell to their lowest over the past two quarters. They are at their lowest in two years, the data showed. Internationally, China technology company initial public offerings in the second quarter fell by almost two-thirds of the value recorded in the first quarter. Offerings in the second quarter raised a combined $6 billion only.
That is a significant drop from the $15.3 billion raised in Shanghai, Shenzhen, Hong Kong and New York during the first quarter.
The decline has mostly been caused by increasing pressure from regulators, which have increased their oversight of big companies in the sector. Late last year, China blocked the planned $37 billion initial public offering of Jack Ma's Ant Group. Regulators ordered the company to restructure after it found it guilty of monopolistic practices.
"China's regulatory issues are more fundamental because they question the reputation that can be given to businesses. Indeed, this is very important for companies considering an initial public offering," analysts at Societe Generale said.
Louis Tse, managing director of Welcy Securities, said the decline was also a result of a wider shift from high-growth stocks. However, Tse said China's crackdown and an increased scrutiny of China companies by the U.S. had forced some investors to rethink their holdings.
Tse said there was a growing concern of some China companies being delisted in New York after the Joe Biden administration passed a law banning investments in companies accused of having military ties.
Some analysts have remained optimistic, stating that China's technology initial public offerings may be on the path to a resurgence. Big China technology companies such as Xpeng Motors and Didi Chuxing are set to list soon.
"I don't think it's a sign of losing market appeal or opening the door to technology. I think it's a timing issue," analysts at Mayer Brown said.
