The migration of US-listed Chinese companies to Hong Kong for secondary listings could attract as much as $557 billion to the Asian financial hub, American investment bank Jefferies estimated in a report, reported Caixin.
Hong Kong has become increasingly attractive to mainland-based companies as US investors grow wary of Chinese companies after a series of fraud scandals prompted an increasingly hostile American regulatory environment. After the $310 million financial reporting fraud of Chinese Starbucks challenger Luckin Coffee, the American Senate cleared a measure that could lead to delistings of Chinese stocks that don’t comply with certain financial transparency requirements.
This month, Chinese online gaming company NetEase initiated a secondary listing in Hong Kong to raise about $2.6 billion, followed by Chinese e-commerce giant JD.com’s planned $3.9 billion listing. Other Chinese companies have also announced intentions to delist from the US and float shares in Hong Kong, including internet search giant Baidu.
Jefferies said 31 Chinese companies currently listed in the US could potentially flock to Hong Kong. Analysts from UBS Securities said 42 US-listed Chinese companies are eligible for secondary listings in Hong Kong. Currently, 251 Chinese companies are listed in the US with a total market cap of $1.71 trillion, mostly in technology and consumer sectors.