HK stock market popular for secondary listings of Chinese mainland companies
Published: Aug 25, 2021 07:44 PM
Photo taken on July 1, 2020, shows Golden Bauhinia Square in Hong Kong, China. Photo: Xinhua

Photo taken on July 1, 2020, shows Golden Bauhinia Square in Hong Kong, China. Photo: Xinhua

Hong Kong has become a popular market for secondary offerings by US-listed, Chinese mainland-based technology, media and telecommunications (TMT) companies, with the appeal of the market expected to keep growing in the coming months and years, a report showed on Wednesday.

In the first half of 2021, four TMT enterprises chose Hong Kong for secondary listings that raised a combined 52.9 billion yuan ($8.17 billion), accounting for 25 percent of the total financing for TMT IPOs in the first half of the year, according to a report PwC sent to the Global Times on Wednesday.

These four companies were Autohome Inc, Baidu, video streaming and mobile gaming site Bilibili, and online travel platform Group.

Their secondary listings in Hong Kong came amid the US' persistent push for "decoupling" from Chinese manufacturing. Just days after the US Securities and Exchange Commission (SEC) suspended Chinese companies' IPOs, SEC Chairman Gary Gensler warned about the risks of investing in Chinese firms and demanded that US officials be allowed to inspect Chinese companies' audit papers.

"The appeal of the Hong Kong market for mainland-based companies is anticipated to keep growing over the second half of 2021," Wilson Chow, PwC global TMT industry leader, said. 

He said that measures taken by Chinese and American regulators on the listing of Chinese enterprises in the US market have paved the way for mainland enterprises to list in Hong Kong.

The Hong Kong IPO market remained vibrant in the first half of 2021, welcoming major listings such as Kuaishou Technology and JD Logistics, and a range of innovative new biotechnology companies. 

After raising IPO funds totaling $211.7 billion, up 128 per cent year-on-year, Hong Kong market ranked third globally during the period, according to the exchange's interim report.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, said that the strong Hong Kong equity market, buoyed by its ever-closer ties to the mainland, would be powerful to narrow the financing gap, in the wake of the US government' continued hostility toward Chinese listings.

While calling for efforts to facilitate China-US auditing partnerships and strengthen exchanges to stabilize policy expectations and the institutional environment, the Chinese securities regulator reiterated in a recent meeting that it intends to deepen connectivity between the mainland and the Hong Kong market, and firmly support the stable development of Hong Kong's capital market.