The Chinese stock market, particularly the A-share segment, has recently witnessed a surge of companies announcing their intentions to list on the Hong Kong Stock Exchange (HKEX). This movement has seen numerous prominent firms affirm their plans to debut on the main board of the HKEX, including heavyweights such as Jiangbolong, Maiwei Biotechnology, Sanhua Intelligent Controls, Haitian Flavoring and Food, and Hengrui MedicineThis trend has been significantly bolstered by the successful listings of Midea Group and SF Holdings on the Hong Kong markets earlier in the year, which have set a positive precedent and invigorated the new stock offerings in Hong Kong.
Hong Kong authorities are actively working to streamline the Initial Public Offering (IPO) approval process, crafting a fast-tracked path for A-share companies with market capitalizations exceeding 100 billion yuan to list in the city
On December 19, the HKEX published a consultative document proposing to reduce the minimum listing thresholds for H-shares, which are the shares of companies incorporated in mainland China that are traded on the Hong Kong stock exchangeAccording to Ou Zhenxing, managing partner of Deloitte China’s South China region, this push is primarily driven by the central government’s support for leading enterprises to take their businesses to Hong KongWith the acceleration of regulatory approvals for overseas listings, he anticipates that a growing number of companies will follow the “A+H” listing model in the coming year, contributing significantly to the dynamism of the Hong Kong IPO market.
Recently, Jiangbolong announced its intention to further internationalize its operations, propelled by a strategy of technological innovation and international expansionThis decision is part of a broader trend where many companies are leaning towards issuing H-shares to bolster their overseas presence
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Similarly, Maiwei Biotechnology has expressed its ambition to raise funds through H-shares to ensure sustainable growth and enhance its international footprintSanhua Intelligent Controls, which previously had intended to list in Switzerland, has also pivoted towards the Hong Kong market in pursuit of a stronger international strategy and better competitive positioningAdditionally, Jingdong Technology has stated that the drive towards an A+H listing is crucial for its aspirations in the global automotive sector and for cultivating deeper capital integration.
The Midea Group’s listing on the HKEX on September 17 marked a significant milestone, raising around HKD 35.7 billion, making it the second-largest IPO globally in 2024. Following suit, SF Holdings made its debut on the Hong Kong exchange on November 27, marking a historic moment as the first express logistics company to adopt the A+H listing strategy
The appeal of these A-share companies in the Hong Kong arena not only enhances market attractiveness but also amplifies its global influence.
According to Ou Zhenxing, companies that opt for the “A+H” route will infuse much-needed vitality into the Hong Kong IPO market in the upcoming yearHe highlighted that a third of the top 500 listed companies by market capitalization in mainland China are already listed in Hong Kong, suggesting that there’s considerable potential among the remaining two-thirds, especially in sectors like alcohol and electric utility servicesFurthermore, multiple A-share companies planning to list in Hong Kong boast valuations exceeding 200 billion yuan, with several large firms exploring their options.
Statistical data reveals that the proportion of A-share companies listed in Hong Kong is considerably high among firms with market values exceeding 100 billion yuan
Out of 134 A-share companies valued at over 100 billion yuan, 55 have listed H-shares, accounting for 41.04%, primarily dispersed across industries such as banking, non-bank financial services, and metals.
Famed financial analyst Gui Haoming noted that the current climate suggests a continued influx of A-share companies seeking to issue H-shares in Hong KongThe relatively fewer IPOs in the A-share market this year has made the Hong Kong exchange an attractive alternative, especially given its geographical proximity and the existing mechanisms for cross-border investments between the two marketsGui emphasized that not only large-cap companies are targeting Hong Kong; smaller and mid-cap firms with distinctive industry characteristics are also gravitating towards H-share listings due to the more mature financial infrastructure and greater international capital accessibility in Hong Kong.
In fact, the regulatory bodies in Hong Kong have been vigorously promoting the process for A-share companies to list in the city
At the end of November, HKEX hosted its second HKEX China Forum in Shanghai, where HKEX Chief Executive Charles Li indicated that qualifying companies already listed in the A-share market could enter a fast-track approval process for listing in Hong Kong under certain conditions.
On December 19, the HKEX released further suggestions aimed at optimizing the pricing and regulatory framework for IPOs, advocating for a reduction in the minimum thresholds for H-share listings to encourage more A-share companies to seek opportunities in Hong Kong.
Liu Guoxian, KPMG China’s partner overseeing capital markets, remarked that the HKEX's recent proposals are designed to grant A-share companies greater flexibility while ensuring that their stocks maintain ample liquidity in the Hong Kong marketThese developments mark an encouraging phase for cross-listed companies as they navigate the increasingly competitive landscape of global finance.