Amended listing rules to compel Chinese tech firms to list on HKEX: report

This amidst the global political conflict between the US and China.

The amended listing rules will encourage Chinese technology firms to list on the  Stock Exchange of Hong Kong’s (HKEX), especially as there are ongoing tensions between powerhouses US and China, Fitch Solutions said.

The count of listed Chinese  firms in the US went down to 252 by the end of early 2023 from 262 during the end of September 2022. Chinese companies also found a decline of 10% of Chinese companies in its total listed issuers.

Fitch said the Hong Kong budget speech showed that the HKEX has plans to revise its listing rules to introduce a new regime for advanced tech firms.

“In an earlier consultation published in the fourth quarter of 2022, these companies were defined as those primarily engaged in the research, development and commercialisation of next-generation information technology, advanced hardware and materials, new energy and environmental protection, and new food and agricultural technologies,” said Fitch.

Fundraising hub for Chinese firms

Aside from tech firms, the Hong Kong-based Chinese securities companies, as a whole, may expand their equity underwriting market share after amended listing rules in Hong Kong take effect in 2023.

“We believe the Chinese securities companies are in a stronger position to benefit than their foreign and local peers in Hong Kong due to the increasing connectivity between the Chinese and Hong Kong capital markets as well as existing customer relationships from their onshore parents,” said Fitch.

Ultimately, new measures may reinforce Hong Kong’s status as a key offshore fundraising destination for mainland Chinese firms and lure more listings.

“This will support the strategic importance of Hong Kong-based securities subsidiaries to their onshore parents, and could influence our assessment of their parent companies’ support propensity. However, the Chinese corporates’ rising presence in the Hong Kong stock market will also contribute to the market’s increasing concentration and susceptibility to volatility transmitted from mainland China’s economy,” added Fitch.