Baidu is considering upgrading its current secondary listing status in Hong Kong to a dual primary listing. On January 14, according to Bloomberg citing informed sources, as Baidu plans to advance the listing of its subsidiary Kunlunxin, which operates data center and AI chip businesses, related discussions have accelerated. This move aims to gain access to capital inflows from more mainland investors. Baidu is currently listed on Nasdaq and concurrently has a secondary listing in Hong Kong. Because the current secondary listing status does not meet the inclusion criteria for the Stock Connect program, mainland investors cannot invest in Baidu through this mechanism. Qualifying for the Stock Connect program is a key driving factor. If upgraded to a "dual primary listing," Baidu is expected to gain eligibility for inclusion in the Stock Connect program, thereby directly accessing the vast market of mainland investors. However, when mainland enterprises apply for inclusion in Stock Connect, they must also meet specific regulatory requirements concerning equity structures, such as weighted voting rights arrangements. A "dual primary listing" means the company must simultaneously comply with the listing rules of both markets, including requirements for information disclosure, financial reporting, and corporate governance. The stocks are listed independently on the two exchanges, and a delisting from one exchange does not automatically terminate the listing status in the other, providing the company with an additional risk buffer in the current geopolitical environment. However, opting for a "dual primary listing" also entails higher compliance costs, including stricter disclosure obligations and increased administrative and financial expenditures. This decision requires a trade-off between expanding the investor base and bearing the additional costs of listing. The attractiveness of the Hong Kong market is on the rise. The Hong Kong stock market has recently shown strong performance, with the Hang Seng Index accumulating a gain of approximately 40% over the past year, attracting a large number of companies to conduct stock issuances worth tens of billions of dollars in Hong Kong. Taking the AI chip design company Biren Technology as an example, its stock price surged nearly 100% within just two weeks after listing in Hong Kong. Meanwhile, Baidu's American Depositary Receipts (ADRs) have risen about 90% over the past 12 months, significantly outperforming the 21% gain of the Nasdaq Golden Dragon China Index during the same period. This robust market performance has created favorable conditions for Baidu to further expand its presence in the Hong Kong capital market.
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