According to exchange data, 30 A-share companies have filed for HK share sales this year, exceeding last year’s total of 16 applications.
Chinese companies listed on mainland exchanges are increasingly turning to Hong Kong for additional stock listings, motivated by appealing valuations, robust liquidity, and favorable policies.
Contemporary Amperex Technology
is set to secure the largest deal of the year.
The Shenzhen-based company CATL, which leads globally in manufacturing EV batteries, plans to assess investors’ interest ahead of an expected $5 billion share offering this week. This move comes following the approval granted by the Hong Kong Stock Exchange’s listing panel on Tuesday. Should it proceed, this could become one of the biggest initial public offerings in Hong Kong recently.
Kuaishou Technology
secured $6.2 billion in funding from its
Initial Public Offering (IPO) launched in January 2021
.
CATL is one of the 30
Listed companies with A-shares that have filed applications
For H-share listings in Hong Kong up until now this year, the number has exceeded last year’s total of 16, as per the most recent information provided by the Hong Kong Stock Exchange and industry research firms. Between 2016 and 2023, such initial public offerings typically averaged around five each year, according to a CGS International report issued in March.
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According to a report from the official Chinese securities news outlet, Securities Daily, published on Tuesday, 46 A-share firms intend to go public in Hong Kong this year.
On Wednesday, Wu Qing, who serves as the chairperson of the China Securities Regulatory Commission (CSRC), announced that the regulatory body plans to simplify the procedures and processes involved in filings for overseas listings. This move aims at enhancing both the quality and efficiency of these listings. Additionally, this initiative seeks to reinforce Hong Kong’s position as a leading global financial hub.
Regulatory backing is anticipated to boost the A-to-H listing trend even more, complementing the CSRC’s initiatives introduced in April 2024 aimed at facilitating initial public offerings for top-tier Chinese firms in Hong Kong. This also follows the announcement made by the Hong Kong stock exchangeoperator in October about speeding up share listings for companies traded on China’s mainland.
At the same time, reducing price disparities between Hong Kong and mainland stocks is expected to be advantageous for Chinese firms aiming for higher valuations in the region.
As reported by the Hang Seng Stock Connect China AH Premium Index, the difference in prices across these two markets has decreased by 6.8 percent since the beginning of the year. At present, the index stands at 135.25, reflecting a 26 percent weighted average discount when comparing H shares with A shares.
“The gap between A shares and H shares has significantly shrunk, with the H-share discount being less prominent compared to previous years,” stated Jason Chan, senior equity strategist at Bank of East Asia. “This situation makes Hong Kong’s fundraising opportunities particularly appealing for firms from mainland China, especially considering the stringent regulatory climate on the Chinese mainland.”
He mentioned that Chinese businesses were drawn to Hong Kong due to the swift rebound of its market, which recovered faster compared to those on the mainland.
Up until now this year, the city’s main Hang Seng Index has climbed approximately 13 percent, whereas the CSI 300 Index, representing the top 300 stocks in both Shanghai and Shenzhen, has dropped by about 3.2 percent.
It is anticipated that the substantial capital inflow from mainland China into Hong Kong-traded equities will have a positive impact on companies considering an initial public offering.
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 143 billion yuan (US$19.8 billion). This figure represents an increase of about two times compared to the same period from the previous year, as reported by financial information service provider Wind Information. Moreover, Goldman Sachs projected in their recent forecast that net southward flows might rise by around 50% to reach US$110 billion for this year.
“In light of the somewhat unstable global market conditions, businesses, financial organizations, and investors have boosted their positions 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 that this situation has once more underscored Hong Kong’s role as an international financial hub.
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The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.
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