9 Chinese firms eye HK amid US delist threat

Business | Agencies and Avery Chen 12 Aug 2020

US Treasury Secretary Steven Mnuchin has said that companies from China and other countries that do not comply with accounting standards will be delisted from US stock exchanges as of the end of 2021. His comments came amid news that at least nine US-listed Chinese firms are reportedly seeking second listings in Hong Kong.

Mnuchin and other officials recommended the move to the US Securities and Exchange Commission last week to ensure that Chinese firms are held to the same standards as US companies, prompting China to call for frank dialogue. Mnuchin told a White House briefing on Monday night the SEC was expected to adopt the recommendations.

The latest move will accelerate secondary listing plans of US-listed Chinese firms, analysts said. Edward Au, co-leader of Deloitte China's national public offering group, expects six to nine Chinese companies will launch their Hong Kong dual listing this year in the second half, but they may not delist from the US bourses voluntarily as they would face more risk.

Au expects those initial public offerings might be smaller than that of JD.com (9618) and NetEase (9999).

Hong Kong Exchanges and Clearing (0388) traded flat at HK$374 yesterday. It has risen more than 47 percent so far this year, thanks to mega "homecoming" listings that drove up the turnover of the local bourse.

Chinese video streaming company iQiyi, which is currently listed in Nasdaq, is weighing a Hong Kong public sale, mainland media reported yesterday.

Meanwhile, Tencent (0700)-backed insurance tech startup Waterdrop has raised about US$200 million (HK$1.56 billion) to bankroll its expansion in healthcare crowdfunding, Bloomberg reported citing sources.

Waterdrop is working with Bank of America and Goldman Sachs on the IPO, seeking a valuation of about US$4 billion. The US is among potential listing venues but no final decisions have been made.

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