Chinese firms have often preferred a listing in the USA. However, due to the current trade war, Alibaba is looking to head back home. Alibaba had debuted over 5 years ago in an IPO valued at $25 bn. It is now considering another listing on the HKSE. Other Chinese firms are also considering this move.
Kevin Leung of HIS stated that more Chinese firms were considering a shift back to China and Hong Kong, given current uncertainty. The current trade war between China and USA has seen Huawei being blacklisted as well as Beijing taking measures against American companies.
Leung stated that the USA had issues with China’s rapid growth. Last year, ZTE had to suspend operations temporarily due to Washington banning its purchasing powers in the USA.
He added that dual listings would be on the rise, especially for Chinese firms with core operations located in China. These had stable earnings, huge market caps and brand recognition, cemented in China. Baidu, CTrip, and JD.com, currently listed on NASDAQ are likely to go through with this move.
Gil Luria of DA Davidson stated that these companies were looking for the best valuations. Due to current trade uncertainty, Chinese listings were facing increased scrutiny. Legislations are already underway in the USA which requires Chinese firms listed there to allow regulatory oversight. More restrictions may also be imposed going forward. The SEC was also looking to tighten its grip over Chinese firms.
Greater China markets were now attractive locations since Chinese investors were now modernizing themselves regarding the market and capital requirement. A dual listing in China or Hong Kong may simplify the process for Chinese investors to invest in Chinese shares listed abroad.
Charles Lo of HKSE stated that this move would take place soon enough.
However, Dickie Wong of Kingston Securities stated that the USA was open-minded regarding stock listings. Anyone who complied with the law had nothing to worry about.
While Chinese and Hong Kong stock exchanges may be improved their regulations, secondary listings were still not viable. He cited examples, explaining how HKSE still had a long way to go. Wong stated that valuations were higher in the USA, which may not be possible in China. While Alibaba could probably do well with a HKSE listing, not many Chinese firms would be successful, he said.
Edward Ordway, with a BSc (Hons) Business & Management degree, is been working as a Senior Content Writer for 3 years in our organization. He is given the accountability to write articles and blogs associated with the world of Business, comprising deals & agreements, mergers & acquisitions, cryptocurrency, stock market, and other trending topics. Edward, in free time, travel around to new places and share the experiences through his personal blog.