Here are the Chinese trends investors have bet on so far in 2022

A factory in Suqian, Jiangsu province, China on May 9, 2022.

Edition of the future | Edition of the future | Getty Images

BEIJING — In numbers, manufacturing companies in China landed the most investment in the first half of the year among 37 sectors tracked by the Qimingpian company database.

In fact, the number of early-stage to pre-IPO deals in manufacturing is up around 70% year-over-year despite Covid checks and a drop in Chinese stocks over the past six months. last months.

About 300, or about a quarter of those deals, were related to semiconductors, according to preliminary data. Several of the investors listed were government-related funds.

Seed investment data is not always complete due to the private nature of transactions. But the figures available may reflect trends in China.

Investor interest in chip companies comes as Beijing has clamped down on consumer-focused internet companies, while promoting the development of technologies such as IC design tools and semiconductor production equipment.

Manufacturing accounted for about 21% of investment transactions in the first half of the year, according to Qimingpian. The second most popular industry was business services, followed by health and medicine.

Startups related to electric cars and transportation ranked first in terms of capital raised, with 193 billion yuan ($28.82 billion), based on available data. Monetary amounts were not disclosed for many transactions.

“Over the past 12 months, I think there has been a lot of hot capital looking for a few deals in sectors that the government is promoting heavily,” Gobi Partners managing partner Chibo Tang said without saying. name specific industries. He said the trend has led to dramatic increases in valuation, while the fundamentals haven’t changed much.

A two-month lockdown in Shanghai and Covid-related restrictions have affected the business climate and prevented people from traveling to discuss and strike deals.

In the first half of the year, the total number of investment deals in China fell 29% from the same period a year ago and 25% from the second half of the year latest, according to CNBC’s calculations from data from Qimingpian.

“Given the market downturn in recent months, there’s a lot more capital on the sidelines,” Gobi Partners’ Tang said Monday on CNBC’s “Squawk Box Asia.”

His company expects more early-stage investment opportunities to arise over the next 12 months as valuations fall. Tang noted how many startups that raised capital 18 months ago had growth forecasts that are now being revised down.

“Founders have a harder time raising money,” he said, “so the conversations we have with them are about how they need to keep their capital, how they need to expand their track.”

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Over the past 12 months, Beijing’s crackdown on tech and education companies following Didi’s New York IPO has suspended the ability of investment funds to easily cash out their bets through a initial public offering.

While the future of Chinese stock quotes in the United States remains uncertain, many start-ups have opted for a market closer to home.

But as of June 14, more than 920 companies were still awaiting IPOs in mainland China and Hong Kong, according to an EY report. Little has changed since March.

“Pipelines remain strong in part due to the backlog of some delayed IPOs since the first quarter,” EY said in the report.

Sentiment in continental markets has picked up as Covid controls have eased in recent weeks. Despite year-to-date declines of more than 6%, the Shanghai Composite Index jumped nearly 6.7% in June for its best month since July 2020.

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