The number of Chinese groups listing their shares in the US has grown faster under the Trump administration than during that of predecessor Barack Obama, despite moves to decouple the two economies.

Since Donald Trump assumed the presidency almost four years ago, 102 Chinese companies have debuted on the New York Stock Exchange and Nasdaq, raising $25.5bn, according to data from research firm Dealogic.

That nearly equals the 105 initial public offerings of Chinese companies held in the US during Mr Obama’s eight years in office, which raised a total of $41bn thanks in part to the blockbuster $25bn listing of ecommerce group Alibaba in 2014.

The Trump administration has threatened to delist Chinese companies that trade on Wall Street if they do not provide US regulators with full access to their audit reports, a practice forbidden by Beijing.

New York-listed Chinese groups have also been the subject of scandals, such as beverage chain Luckin Coffee, which was delisted by Nasdaq after admitting to fabricating hundreds of millions of dollars in sales.

Despite that, the number of Chinese companies listed in the US rose by more than a quarter over the past year to almost 220 as of the start of October, according to a report from the United States-China Economic and Security Review Commission. The total market capitalisation of US-listed Chinese shares has almost doubled over the same period to $2.2tn, the commission said.

Investors say US capital markets continue to offer better analyst coverage especially for technology companies, as well as deeper liquidity and higher trading turnover.

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Bar chart of Chinese listings activity on Wall Street showing Chinese companies take Trump’s delistings threat in their stride

“The market performance, the fact that valuations are positive for the sectors that are listing right now, that naturally would lead these [Chinese] companies to the US because you’ll get better trading volumes and better pricing,” said Jason Elder, a partner at law firm Mayer Brown, of why Chinese groups choose to list on Wall Street.

Chinese businesses are not only tapping US markets more often, they are also raising more funds. Companies have on average raised $250m during the past four years, more than the $154m on average under Mr Obama, excluding the blockbuster 2014 Alibaba IPO.

Mr Elder attributed the increase in average IPO size to the development of Asia’s private equity and venture capital industries in recent years, meaning Chinese groups now wait longer before seeking cash from public markets.

The Trump administration’s delisting policy is part of a broader push to decouple parts of the US economy from China. Mr Trump has accused Beijing of currency manipulation and blamed it for the global spread of Covid-19.

Whether or not the number of Chinese listings in the US continues to accelerate could hinge on the outcome of next month’s election, analysts say.

Column chart of Funds raised by Chinese IPOs on Wall Street ($bn) showing China listings in US continue despite talk of 'decoupling'

More businesses from China could delist if Mr Trump secured another four-year term, said Bruce Pang, head of macro and strategy research at investment bank China Renaissance, but a victory for Democratic party candidate Joe Biden could mean the US eased pressure on these companies.

“Chinese authorities would be more willing to co-operate with US regulators [on audit reports] if Biden wins,” Mr Pang said. “Right now it’s like a deadlock between” Beijing and Washington.

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Some big Chinese companies have already begun hedging their bets with secondary listings in Hong Kong, where ecommerce groups including Alibaba, JD.com and NetEase have raised billions of dollars.

But analysts said Hong Kong could not match Wall Street in every respect. The former did not permit corporate weighted voting rights — allowing companies to hold shares that have extra voting rights. These are used by Chinese start-ups valued at hundreds of billions of dollars.

“If the Hong Kong exchange doesn’t revise its restrictions, all these unicorns with corporate weighted voting rights will have to choose . . . the US rather than Hong Kong,” said Mr Pang.

Via Financial Times