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Stocks

Hong Kong Set to Benefit as Beijing Discourages US Tech Listings

Strategic Insights

— 2 min read

Hong Kong's stock exchange is expected to become a more attractive option for mainland Chinese technology companies as Beijing begins to discourage them from listing in the US. This shift in policy is likely to be driven by the Chinese government's desire to reduce its dependence on the US capital market and promote the development of its own stock markets. As a result, many technology companies may choose to list in Hong Kong instead, taking advantage of its more relaxed listing rules and access to a large pool of liquidity.

Key Takeaways:

  • Over 1,300 mainland firms have listed in Hong Kong since 1993, representing 80% of the total market capitalization.
  • The US has been gaining ground in recent years, with 34 Chinese firms raising US$12.5 billion in the US in the first half of this year.
  • Hong Kong's HKEX has reformed its listing rules to allow new economy companies with multiple classes of voting rights and pre-revenue biotechnology firms to list in the city.
  • 146 new economy companies have listed in Hong Kong in the past three years, raising a total of HK$682.2 billion (61% of all floats).
  • The city's regulatory regime is "ready to serve mainland technology companies that cannot list in the US," according to Clement Chan, managing director of accounting firm BDO.
  • Many technology firms will delay their listing timetables as they revisit their business models and data governance, according to Edward Au, Deloitte China's southern region managing partner.
  • The Hong Kong IPO market was vibrant even prior to the news, with total funds raised in the first half increasing by 127% year on year.
  • Kenneth Ho Shiu-pong, equity market managing director at Haitong International Securities, believes that growth will continue, with more technology companies considering listing in Hong Kong instead of the US.

Statistics:

  • 1,300+ mainland firms have listed in Hong Kong since 1993.
  • 80% of the total market capitalization is represented by mainland firms listed in Hong Kong.
  • 34 Chinese firms raised US$12.5 billion in the US in the first half of this year.
  • 146 new economy companies have listed in Hong Kong in the past three years.
  • HK$682.2 billion (61% of all floats) was raised by new economy companies in the same period.
  • The shares of Hong Kong Exchanges and Clearing (HKEX) have risen by 9% this month.

Sources:

  • Morgan Stanley Asia: Robin Xing, chief China economist.
  • Orrick: Jeffrey Sun, partner.
  • Haitong International Securities: Kenneth Ho Shiu-pong, equity market managing director.
  • Deloitte China: Edward Au, southern region managing partner.
  • Vontobel Asset Management: Ramiz Chelat, portfolio manager.
  • Morrison & Foerster: Vivian Yiu, partner.
  • Refinitiv: Financial data provider.
  • Jefferies: Edison Lee and Chi Tsai, analysts.
  • HKEX: Press release.
  • BDO: Clement Chan, managing director.
  • The Post: Alibaba Group Holding's parent company.

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