(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Chan Ka Sing
HONG KONG, Jan 9 (Reuters Breakingviews) - The next wave of share sales in Hong Kong will come from Chinese mainland-listed companies with global ambitions. Beijing’s efforts to shore up the hub’s status as an international financial centre helps, yet a narrowing of other fundraising avenues also make offshore listings an imperative.
At least 20 companies have filed applications to trade H-shares in Hong Kong. The herd includes pharmaceutical giant Jiangsu Hengrui and leading soy sauce producer Foshan Haitian Flavouring & Food , with a combined market value of nearly 600 billion yuan ($82 billion). Battery-maker contemporary Amperex Technology Co. Ltd
also confirmed in late December it is planning a listing, which could raise at least $5 billion, Bloomberg reported, citing people familiar with the matter.
It's a blast from the past. Beer firm Tsingtao Brewery’s
H-share offering in Hong Kong some 30 years ago kicked off Chinese companies' initial public offering frenzy in the former British colony. Yet, the pipeline dried up after most of the biggest state-owned enterprises made their debuts. Tech startups followed later, but such rising stars rarely emerge these days following the Chinese government’s crackdown against the sector started in 2020.
Things are picking up after Beijing rolled out a raft of measures to speed up offshore listings. Thanks to a successful offer of home appliance giant Midea , which raised $4 billion in the city in September, secondary listings of Chinese firms accounted for 51% of Hong Kong’s IPO fundraising last year, per Hong Kong Exchanges and Clearing.
Other traditional avenues for Chinese companies to raise money are narrowing. Follow-on share offerings on the mainland are generally discouraged because regulators want companies to focus instead on boosting dividend payouts and share buybacks. And while listings in New York and London remain sought after, these face greater scrutiny because of the soured Sino-American bilateral relationship. Offshore bond issuance by Chinese listed companies also plunged to less than $7 billion in 2024, 82% below the 2020 level, Dealogic data show.
This squeeze can benefit Hong Kong. Take Kweichow Moutai
. The spirits giant has for years talked up its desire to become a global brand, and the slowdown in China probably makes it even more keen to expand. It will be hard for the company to venture far without access to foreign capital, however. That sets up Hong Kong's next tailwind.
CONTEXT NEWS
Chinese battery manufacturer CATL is planning to seek a listing in Hong Kong, a Shenzhen Stock Exchange filing showed on Dec. 26. The proposal is pending approval from regulators including the China Securities Regulatory Commission, the company said.
Regulators in mainland China and Hong Kong told investment banks to help speed up Chinese firms’ listings in the city in a bid to boost fundraising overseas and revitalise the world’s second-biggest economy, Reuters reported on Dec. 9, citing sources who attended the meeting.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: Chinese mainland traded firms are rushing for Hong Kong IPOs
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(Editing by Una Galani and Ujjaini Dutta)
((For previous columns by the author, Reuters customers can click on KaSing.Chan@thomsonreuters.com))
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