HONG KONG, June 3 Reuters More than a year after China pledged to smoothen the process for offshore listings, firms are reeling from a regulatory logjam that is unlikely to ease soon, and staring at the prospects of sharply lower valuations even as market sentiment improves.

Hopes for a revival in overseas listings were sparked by Beijing39;s vow in April to facilitate Hong Kong IPOs and a strong debut of Zeekr in New York last month. China has clamped down on offshore capital raisings since 2021.

A 6.1 yeartodate jump in the Hang Seng index as of Friday, after having fallen as much as 18 in the past year, was also expected to offer a window of opportunity for IPO entrants.

But bankers, China company executives and their investors said they expect the offshore IPO drought to continue this year, weighing on firms39; ability to raise capital in a slowing economy.

Offshore listings are critical fundraising channels for Chinese companies. These deals also account for a bulk of the revenue global investment banks make in Asia.

A lack of such deals, as a result of China39;s regulatory crackdown as well as volatile capital markets and geopolitical tensions over the past couple of years, has resulted in bank layoffs and weighed on returns for private equity funds.

At least 20 billion worth of Chinese firms39; Hong Kong IPO proposals have been awaiting approval for months, according to Reuters calculations. Bankers close to those deals say most of the sizable ones are…