According to exchange data, 30 A-share companies have sought permission to list in Hong Kong this year, which exceeds the 16 applications from last year.
Chinese mainland companies are increasingly turning to Hong Kong for fresh equity listings, spurred by favorable valuations, robust liquidity, and supportive regulatory measures.
Contemporary Amperex Technology
is set to have the largest deal of the year.
Shenzhen-based CATL, which leads globally as the top manufacturer of EV batteries, plans to assess potential investors’ interest following the nod from the Hong Kong Stock Exchange’s listing panel on Tuesday. This comes ahead of an expected $5 billion share offering this week. Should it proceed, the flotation will mark one of the biggest listings seen in the region recently.
Kuaishou Technology
secured $6.2 billion in funding from its
initial public offering (IPO) in January of 2021
.
CATL is one of the 30
Listed firms that have filed applications
For H-share listings in Hong Kong this year, the number has exceeded last year’s total of 16, as per recent data from the Hong Kong stock exchange and sector-specific research firms. From 2016 to 2023, such initial public offerings typically averaged about five annually, notes a CGS International report issued in March.
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According to Securities Daily, a state-run news source, 46 A-share firms intend to go public in Hong Kong this year. This information was published on Tuesday.
On Wednesday, Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), said the market regulator would streamline the filing mechanism, process and related elements for overseas listings to further improve the quality and efficiency, strengthening Hong Kong’s status as an international financial centre.
Regulatory backing is anticipated to boost the A-to-H listing phenomenon even more, complementing the CSRC’s initiatives introduced in April 2024 aimed at facilitating initial public offerings for major Chinese firms in Hong Kong. This also follows the HKEX’s declaration in October about streamlining share issuances from domestically listed Chinese enterprises.
At the same time, reducing disparities in discounts between Hong Kong and mainland stocks is expected to be advantageous for Chinese firms aiming for higher valuations in the region.
The difference in prices across these two markets has decreased by 6.8 percent since the beginning of the year, as reported by the Hang Seng Stock Connect China AH Premium Index. This index currently stands at 135.25, reflecting a 26 percent weighted average discount for H shares compared to A shares.
The gap between A-shares and H-shares has significantly shrunk, with the H-share discount being less significant compared to previous years,” noted Jason Chan, senior equity strategist at Bank of East Asia. “This renders Hong Kong’s fundraising opportunities more appealing for firms from mainland China, particularly since regulations remain stringent domestically.
He mentioned that Chinese firms were drawn to Hong Kong due to the swift rebound of its market, which outpaced the recovery seen on the mainland.
Up until now this year, the city’s primaryHang Seng Index has surged approximately 13 percent, whereas theCSI 300 Index, representingthe combined performance of China’s top 300 listed companiesin bothShanghai and Shenzhen,has droppedby about 3.2percent.
It is anticipated that the significant inflow of capital from Mainland China into Hong Kong-listed equities will prove advantageous for prospective initial public offering (IPO) contenders.
During the initial four-month period of this year, the average monthly capital influx via the southern link of the Hong Kong-Shenzhen Stock Connect amounted to approximately RMB 143 billion (USD $19.8 billion). This figure represents roughly twice the monthly average recorded during the same duration from the previous year, as reported by financial information company Wind Information. In a recent projection released last month, Goldman Sachs predicted that net southward flows might surge close to 50% higher, reaching an estimated USD $110 billion for this year.
“In light of the somewhat unstable global market conditions, businesses, financial organizations, and investors have boosted their investments in Hong Kong dollar-denominated assets,” stated John Thang, who leads markets and strategic client management and solutions at Standard Chartered, on Wednesday.
He pointed out this situation has once more underscored Hong Kong’s role as an international financial hub.
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