Beijing’s decision to allow Hong Kong-listed firms to make new stock offerings in Shenzhen could create a “green channel” to help fund their expansion on the mainland, fast-tracking an otherwise strict and lengthy application process, lawyers said.
A listing status in Hong Kong can be regarded as a badge of quality, according to Frank Bi, a partner and head of corporate transactions practice at Ashurst in Hong Kong. Authorities in Shenzhen could count on Hong Kong’s rigorous vetting process when evaluating these offering plans.
“This is really encouraging news for the Hong Kong stock market,” he said. “If A-share listing is really difficult, really slow, come to Hong Kong first. Once you complete the listing, you can go back to the A-share [market] for listing.”
Last week, Beijing unveiled a plan to enable Hong Kong-listed firms from the Greater Bay Area to seek a stock listing in Shenzhen, complementing the current flow of mainland-listed firms making initial public offerings (IPOs) in offshore markets.
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China’s largest EV battery maker CATL celebrates strong debut at Hong Kong stock market
China’s largest EV battery maker CATL celebrates strong debut at Hong Kong stock market
The directive did not specify the qualifying criteria or how and when the programme would be implemented. It is seen as a way to further integrate the Bay Area – an economic zone comprising Hong Kong, Macau and nine cities in southern Guangdong province – and diversify their funding sources.
Top firms like Midea Group and Contemporary Amperex Technology (CATL) have helped fuel A-to-H stock listings, propelling Hong Kong to the top of the global IPO league table this year. The reverse H-to-A channel could create another funding option to support their domestic operations, said Vincent Che, head of equities at Ping An Asset Management (Hong Kong).
