Chinese concept stocks plunged after the US Securities and Exchange Commissions’ recent announcement that another five US-listed Chinese companies might be delisted for non-compliance with US regulations. Although there was a rebound after Vice-Premier Liu He’s reassurance that China will implement policies to stabilise the stock market and support overseas listings, Chinese companies looking to raise capital abroad will still have to deal with two sets of inherently contradictory regulations from the US and China.
Amid regulatory concerns and news of Didi Chuxing delisting from the New York Stock Exchange, it seems that the writing is on the wall for Chinese companies seeking overseas listings. Will the Hong Kong Stock Exchange be their natural refuge? The Hong Kong government has implemented reforms to woo new-economy innovative companies and investors, but will these measures be enough? NUS academic Xu Le has the details.
With the recent tightening of regulations in China and the US, US-listed Chinese companies and those seeking to launch IPOs in the US will be faced with a path of obstacles. To save themselves further headaches and from being embroiled in US-China tensions, will they turn their attention to Hong Kong?
In the context of China-US competition, US-listed China concept stocks companies may find it advantageous to get secondary listings on the Hong Kong or Singapore stock exchange. US companies may also veer towards Singapore and Hong Kong when it comes to international arbitration cases. In the final analysis, will Singapore or Hong Kong have the edge?
In a record listing of 2019, Alibaba’s stock price in Hong Kong rose by 6.6% during its first day of trading on the Hong Kong Stock Exchange. Doing so in the midst of uncertainty in Hong Kong seems risky, but Alibaba’s gambit to reach investors in Asia may just pay off in the long run.