Given the aftershock of the delisting of Chinese stocks, an increasing number of Chinese stocks shift toward Hong Kong for secondary listings.
Wealth management service provider Noah Holdings (6686:HK; NOAH:NYSE) was officially listed on the Hong Kong Stock Exchange on July 13, becoming the first Chinese independent wealth management institution to achieve dual listing in both Hong Kong and the United States. It offers a total of 1.1 million shares, of which the international offering is 5.9 times oversubscribed, 3.3 times the number of the local public offering in Hong Kong.
Goldman Sachs is the sole sponsor and sole representative for this listing.
This is the 23rd US-listed Chinese company to conduct additional or alternative listings. Apart from Noah Holdings, several other Chinese stocks are also lining up to seek ‘homecoming’ listings in Hong Kong, they include KE Holdings, XPeng Inc, Bilibili, Zhihu Inc, NIO Inc and OneConnect.
Their transactions were prompted by concerns that the U.S. SEC may officially initiate the mandatory delisting process from March next year, an anonymous partner at a domestic venture capital firm said.
In this February, the Financial Secretary of the Hong Kong SAR Government, Mr. Paul Chan, announced that Hong Kong is ready for the return of Chinese stocks in a press, including lowering the market capitalization requirement for secondary listing of Chinese stocks, which demonstrates a growing possibility for Chinese stocks to return to Hong Kong.
At present, Chinese stocks can return to Hong Kong in three ways: dual listings, privatization and secondary listings, with most of companies giving priority to the last way. As by the ways of secondary listing, it does not need to dismantle the original VIE structure (Variable Interest Entity), which can save substantial operating time and capital cost.
Hong Kong's capital market can not only further broaden the financing channels of Chinese stocks, but also help them relieve the delisting risks they face in the U.S. stock market. Meanwhile, a secondary listing in Hong Kong will enable Chinese stocks to continue to receive support from international investors while attracting local capital that is bullish on China's economic development.