HK, Singapore seen benefiting from secondary listings

The wave of US-listed Chinese companies seeking a secondary listing elsewhere will create enormous opportunities for major Asian stock markets, as the trend is expected to intensify in the near future, market insiders said.

Bourses in Hong Kong and Singapore could enjoy huge opportunities from the wave as more Chinese companies listed in the United States are expected to re-list elsewhere amid uncertainties in Sino-US relations, said Ding Peng, managing director and head of Singapore Investment Banking at China International Capital Corp.

A number of Chinese companies listed in the US have already made a secondary listing in Hong Kong over the past two years against the backdrop of strained relations between the world's two largest economies, Ding said.

Between 2019 and 2020, there were 10 such secondary listings in Hong Kong, with the total amount of financing reaching nearly $30 billion. They included internet giants Alibaba, JD and Netease.

The trend continued this year. The latest one in the row is video-sharing site Bilibili, which started trading on the Hong Kong stock exchange on Thursday, three years after its Nasdaq IPO. And a week earlier, Baidu made its debut on the Hong Kong bourse.

"There are still many others that have not yet embarked on the journey, including Chinese electric carmaker Nio, e-commerce platform Pinduoduo and discount e-retailer Vip.com, with close to $90 billion worth of capital to be potentially raised," Ding said at an online media conference held by the Singapore Exchange Ltd on March 23.

In a move to grasp the opportunities and attract more companies to raise capital there, Hong Kong's bourse released a consultation paper late on Wednesday proposing to ease listing requirements for companies to list in the Asian financial center.

Under the proposals, overseas-listed Chinese companies from traditional sectors without weighted voting rights will be allowed to make a secondary listing in Hong Kong. Currently, only innovative firms are qualified for making such a move.

The document also proposes to lower minimum market capitalization to HK$3 billion ($386 million) at the time of listing as long as the issuers could demonstrate a five-year track record of good regulatory compliance.

"Our latest proposals to streamline requirements and enhance our listing regime will attract more international and Chinese mainland companies looking to benefit from Hong Kong's liquid financial markets while ensuring that Hong Kong maintains the quality of the market and that the high standards of shareholder protections that Hong Kong is known for are maintained," Bonnie Chan, head of listing at Hong Kong Exchange and Clearing Ltd, said in the Wednesday statement.

Ding said besides Hong Kong, Singapore－it is another major financial market in Asia－has great potential to attract Chinese enterprises for re-listings.

The first reason is that Chinese financial regulators are mulling lifting controls on overseas investment to allow an individual quota of $50,000 a year. That will create a more favorable condition for Chinese people to invest in overseas securities, said the senior investment banker.

Another reason is that Chinese companies are gaining increasing recognition in Southeast Asia, with 74 percent of polled residents in the region recognizing them as industry leaders, which provides a sound environment for them to make secondary listings there, he added.