Jan 17, 2019 07:44 PM

Caixin Explains: Why the Back Door to China's Stock Markets Is So Attractive

Photo: VCG
Photo: VCG

Going public on a stock exchange can allow a company to raise money quickly from a broad pool of investors, as well as gain a stamp of recognition. Most companies do so via initial public offerings (IPOs), which, if well-hyped, can be extremely lucrative. Foxconn Industrial Internet, a unit of the world's largest contract electronics manufacturer that assembles Apple's iPhones, raised 27 billion yuan ($4.3 billion) in its IPO in Shanghai in the summer of 2018, with the stock nearly 1,300 times oversubscribed. Most IPOs in the Chinese Mainland, however, where regulators hold tight control over which companies can list, can be time-consuming and unpredictable. Many Chinese tech companies prefer to float in the U.S. or Hong Kong instead.

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