Some of the Chinese mainland’s tech giants listed in the United States may be making a beeline back to Hong Kong, on the heels of Nasdaq’s reported new curbs on Chinese mainland initial public offerings and the US Senate passing legislation that could oust them from Wall Street.
In a research report released on Friday, Citibank listed up to 23 mainland enterprises that have gone public in the US eyeing a potential flotation or secondary listing in Hong Kong.
Earlier this week, the US Senate passed legislation that could ban many Chinese companies from listing shares on US exchanges or raising money from US investors without adhering to the US government's regulatory and audit standards
According to Citibank, eligible companies must have been listed for at least two years. Startups, in particular, must have a market capitalization of at least HK$40 billion at the time of listing, or a market capitalization of HK$10 billion at listing and at least HK$1 billion in revenue in its most recent audited financial year. Biotech firms must have at least HK$1.5 billion in revenue in its most recent audited financial year.
The list includes e-commerce behemoth JD, NetEase, the mainland’s second-largest game company, and search engine Baidu.
JD is said to be planning to start book building for a $3 billion secondary listing in Hong Kong on June 5 or June 8. It could be followed by NetEase, which was in talks in early May with an investment bank for a secondary listing in the SAR that could raise up to $2 billion, and is reportedly planning to debut next month.
“For a good company, there are many choices of destinations for listing, not limited to the US,” Robin Li Yanhong, chairman and chief executive of Baidu, told China Daily on Thursday. The tech giant, which was mulling a secondary listing in Hong Kong before the coronavirus pandemic erupted, is now reportedly considering delisting from New York altogether.
Earlier this week, the US Senate passed legislation that could ban many Chinese companies from listing shares on US exchanges or raising money from US investors without adhering to the US government's regulatory and audit standards.
“Amid the escalating and protracted Sino-US trade skirmish, US-listed Chinese companies are on the edge. At the same time, the Hong Kong stock exchange is trying hard to polish its brand as a magnet for promising companies. This will speed up the pace of ‘homesick’ companies planning to return to Hong Kong for a secondary listing,” said Ricky Tam Siu-hing, founder and chairman of the Hong Kong Institute of Investors.
The benchmark Hang Seng Index ended the week plunging 5.56 percent, or 1,349.89 points, to 22,930.14 on Friday.
