In the News: Hong Kong Secondary Listings; Four-Decade Growth Low; and Index Futures Reform

Nov 2, 2020
| By Vincent Chow
Hong Kong to allow certain overseas-listed Chinese companies with corporate weight voting rights to secondary list; China expected to grow at weakest pace in 44 years according to Reuters poll; and CFFEX approves equity index futures trading for qualified foreign investors

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Hong Kong allows corporate WVR companies to secondary list

Hong Kong will allow more Greater China companies with weighted voting rights (WVR) listed abroad to secondary list in the city. On Oct. 30, the Hong Kong Exchanges and Clearing Limited (HKEX) announced that it will expand its April 2018 reform to permit Greater China Issuers with corporate WVR beneficiaries and primary listed on the New York Stock Exchange, Nasdaq or the London Stock Exchange’s premium listing segment to secondary list in the city.

The bourse had been undergoing consultation on whether to permit such secondary listings since January. This reform would allow U.S.-listed Chinese heavyweights like Tencent Music and iQiyi to secondary list in Hong Kong; these companies did not previously qualify for the scheme because they had corporate shareholders in a WVR structure. In 2018, the HKEX permitted companies with individual WVR shareholders to secondary list in the city, a reform that has seen giants like Alibaba and JD.com complete listings.

The expansion to include corporate WVR companies in the secondary listing scheme in Hong Kong could benefit dozens of overseas-listed Chinese tech companies that don’t currently qualify. The form could potentially lead to another wave of massive initial public offerings in the city.

The announcement stipulates several requirements for Greater China issuers to qualify for a secondary listing, including that they were listed in one of the qualifying overseas exchanges on or before Dec. 15, 2017, as well as a market cap requirement of $40 billion, or $10 billion with at least $1 billion of revenue for its most recent audited financial year. Looking ahead, the HKEX will conduct another consultation to determine whether to allow unlisted companies with corporate WVR structures to list in the city.

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