Xiuxi Zhu, Priyanka Boghani, and Stefen Joshua Rasay recently published an article, “Hong Kong’s healthy pipeline of TMT secondary listings,” in S&P Global Market Intelligence. The authors explained why the Hong Kong Stock Exchange is best for secondary investments and mentioned requirements to list into it. Dennis O’Neill, CEO of O’Neill Capital Advisors and president of BioMediCan Inc, gave his insight over political tensions and investors’ restrictions.
According to analysts at S&P Global Market Intelligence, the increased liquidity and unfavorable conditions in the U.S are paving the way of the Hong Kong Stock Exchange towards a trend of secondary listings and IPOs. Secondary listings in Hong Kong Stock Exchange have political benefits such as a 24-hour trading cycle rather than trading according to US-time. Analysts believe that increased investor participation in Hong Kong Stock Exchange is irreversible due to its solid daily liquidity.
Various companies are involved in the healthy pipeline of TMT secondary listings of Hong Kong. Because of political tension and restrictions, Chinese investors have limited access to the U.S. market, making it more feasible for them to invest in the Hong Kong Stock Exchange. Their trading through Stock Connect has reached HK$29.1 billion, according to the stock exchange’s website. Chinese search engine Baidu Inc. and video streaming platform Bilibili Inc. have joined this stock exchange.
For companies to join Hong Kong Stock Exchange must be listed on a recognized exchange and must have a “minimum market cap of HK$40 billion, or a minimum market cap of HK$10 billion and at least HK$1 billion in revenue for the most recent audited financial year.” 10 Chinese companies that are listed in the U.S. met these stock exchange requirements. Hong Kong Stock Exchange provides fundraising options for issuers besides secondary listing, which allows them to broaden their investor base.
According to Dennis O’Neill, political tensions and the restrictions on moving money outside of China or Hong Kong make it easier for Asian investors if they are listed on the Hong Kong exchange. Moreover, U.S. has also banned the investment of various blacklisted Chinese companies. This ban makes Chinese investors choose Hong Kong as their secondary listing venue.
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