HKEX CEO Sees China Giants Moving to Primary H.K. Listing
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(Bloomberg) -- Hong Kong is likely to see more dual-traded companies shift toward primary listings in the financial hub as they seek inclusion in trading links with mainland China, according to the city’s exchange chief.
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In a wide-ranging interview that also covered topics including Hong Kong’s quarantine policy and China’s support for the city’s global role, Hong Kong Exchanges and Clearing Ltd. Chief Executive Officer Nicolas Aguzin said more companies with secondary shares in Hong Kong are considering primary listings while others may be forced to do so by market rules as more of their trading volume migrates to the city. The most prominent dual-listed company currently excluded from the Stock Connect with China is e-commerce giant Alibaba Group Holding Ltd.
“What we’ve seen for example in Alibaba and in a few others, is that over time, a lot of the trading is coming to our part of the world,” Aguzin said. “When it’s over 55% trading in our market, at that point they don’t have an option. But they can decide to do it anytime.”
Aguzin didn’t indicate whether Alibaba has held talks with HKEX about a potential primary listing. Alibaba didn’t immediately respond to a request seeking comment. Shares of the Chinese tech giant gained as much as 3.3% in early Wednesday trade to the highest since February.
The prospect of Stock Connect inclusion for companies like Alibaba has been subject of intense speculation among traders in Hong Kong, which currently excludes companies with both secondary listings and weighted voting rights from its mainland trading links.
While some market participants had hoped the exchange would relax the rules that bar such companies, a primary listing is emerging as an alternative path. Bilibili Inc. last week won shareholder approval to convert its secondary Hong Kong listing status to dual-primary while Zai Lab Ltd. completed the procedure in June.
Unlike companies with a primary listing in Hong Kong, firms with a secondary listing in the city are exempted from certain listing rules and don’t have to disclose things such as financial guarantees provided to affiliates and stock pledges made by the controlling shareholder.
Under current rules, a company will be required to convert its listing status to primary if 55% or more of the trading volume takes place on the Hong Kong bourse over the past fiscal year. Still, most secondary-listed firms, including Alibaba, are far from reaching that threshold, according to data compiled by Bloomberg.