Hong Kong exchange could be beneficiary of trade war as mainland tech start-ups shun home and New York markets for IPOs
An increasing number of Chinese companies are seeking to raise capital in the technology, media and telecommunications sectors especially on the city’s stock market
Hong Kong is gaining traction as the primary choice for mainland technology firms seeking to float as they shun stock exchanges in New York, and mainland China, amid the two countries’ simmering trade war.
Frank Lin, a partner at PwC in Shanghai, said an increasing number of Chinese companies are seeking to raise capital in the technology, media and telecommunications (TMT) sectors on the city’s stock market, as they assess the ongoing and potential future impact of the trade stand-off.
“The US-China trade war is expected to escalate in the foreseeable future, and it is going to affect decision-making by Chinese TMT firms looking to choose listing venues,” he said, adding that mainland companies are also closely analysing the spat’s effect on their valuations.
The battle among regional and global stock exchanges to attract prospective Chinese technology firms escalated in the first half of this year when mainland regulators attempted to up their ante in easing IPOs by foreign-funded mainland companies through the Chinese depositary receipts (CDR) mechanism.
Announced in March and aimed especially at luring overseas-incorporated technology leaders, the CDR enables mainland investors that are barred from freely moving their money abroad, to directly trade-in the underlying securities issued overseas.