TAIPEI, Taiwan (TheStreet) -- Chinese companies are having second thoughts about being listed on U.S. stock exchanges.
While they like the capital they can raise from U.S. investors, they are tiring of American regulations that are laxer or missing in China.
To date more than 30 Chinese companies with stock traded on U.S. exchanges have packed up and left in 2015, Thomson Reuters data show.
They will find more freedom to grow their business in fast-moving, competitive China without being hobbled by time spent following American compliance rules. If they re-list in China, valuations are likely to rise. But their departures give American investors less access to some of China's top companies, a conduit to the $10 trillion-plus economy.
"The ostensible reasons for delisting overseas and returning to China are that these firms can then get better valuations on domestic boards and they can avoid hassles in overseas compliance," said Danny Levinson, a Beijing-based technology angel investor.
The latest case is Qihoo 360 Technology (QIHU) , a Beijing-based Internet security firm that analysts say feels American stock market rules are cramping its need for speed to stay competitive in China.
Qihoo's CFO Alex Xu declined comment, but the company said in a news release it will be bought by a consortium of investors in cash transaction worth about $9.3 billion. Qihoo listed in the United States in 2011. It would have the option of going public later on a Chinese index.
Qihoo is bailing on the United States partly because it can "get a much better multiple in China's capital markets," said Mark Natkin, managing director with market research firm Marbridge Consulting in Beijing.
For U.S. investors who have bought into these companies, the delisting usually means companies must reach deals with them for a payout before they can be taken private. The deals vary from company to company.
Chinese regulators are still struggling for a grip on their relatively young stock market, which is known for murky disclosures, accounting fraud and ignoring minority shareholder rights. The market had gained that reputation even before share prices grew 150% over a year and suddenly lost 40% in three months.
"Chinese companies are seeing that outside of raising money through an IPO that a listing in the U.S. can become a burden due to...compliance, and the need to set and hit earnings targets all while being scrutinized by analysts and buyers in a market which does not fully grasp the promise, challenges and intricacies of the China market," said Richard Robinson, founder of Beijing-based app developer Yolu Co.
Other Chinese firms that have gone private this year include Shanda Games and WuXi PharmaTech, which does medical research and development. Chinese online dating service Jiayuan.com (DATE) is in the process of delisting, and last month e-commerce giant Alibaba Group (BABA - Get Report) offered to buy online video service Youku Tudou (YOKU) for $3.7 billion.
Although about 100 Chinese shares still trade in the United States, a steady decline would narrow an easy route for investors keen on China. China's economic growth has slowed since 2011 but is still on track for 6% to 7% growth per year through 2020.
Only 277 foreign institutions approved by Chinese regulators may trade the country's "A" shares. Individuals can invest in "A" shares only through the mutual funds or ETFs of those institutions.
But the growing number of privatization stories threatens the sudden end to investments in U.S.-traded Chinese shares, hobbling long-term positions. Companies' rush for the exit may also raise questions about original investment in their shares.
In 2010 the Securities and Exchange Commission was already investigating a network involving China to steal billions of dollars from American investors through stock fraud.
"Chinese companies have experienced a dramatic increase in regulatory proceedings, shareholder litigation and scrutiny from the business media," corporate finance adviser Duff & Phelps says on its Web site. "Much of this increased scrutiny is focused on perceived or actual financial-related impropriety or misinformation, in many cases amounting to fraud."