Stock Market News: Could Nasdaq Be Restricting IPOs Of Small Chinese Companies?

Nasdaq Inc. could be trying to curb initial public offerings (IPOs) of small Chinese companies on its stock exchange, Reuters reported Sunday. The New York-based index reportedly is cracking down on these IPOs by slowing down their approval, as Reuters notes that their "low liquidity makes them unattractive to many large institutional investors, to whom Nasdaq is seeking to cater."

The IPOs tend to raise their capital from Chinese backers, with Nasdaq-listed companies such as after-school education provider Puxin Ltd. and pet product company Dogness International Corp. having more Chinese than American investors.

A Nasdaq spokesperson said that "we provide non-discriminatory and fair access to all eligible companies" in response to the idea that Nasdaq is cracking down on small Chinese companies going public.

It's been an exciting year for American companies going public, with ridesharing startups Uber and Lyft having their IPOs along with social media platform Pinterest. For Chinese companies, however, few have chosen to have their IPO on an American exchange so far this year.

From January to July of this year, 11 Chinese companies went public in the U.S., raising less than $1.5 billion and representing only 4% of the U.S. IPO market.

As the U.S.-China trade war has escalated, some Chinese companies have chosen to debut on the Hong Kong stock exchange over the Nasdaq. The Trump administration has even considered delisting all Chinese companies on the U.S. exchanges, which would drastically escalate U.S.-China economic tensions.

The White House has reportedly considered delisting these companies over national security concerns and to limit U.S. investment in Chinese firms.

A Treasury official refuted the claim, saying that there are no current plans to limit Chinese companies on U.S. exchanges.

President Trump has frequently derided China's growth as an economic power, as he believes that China has taken advantage of the U.S. on trade and flooded the global markets with cheap exports that have decimated manufacturing.