Whatās Going On Here?NetEase is already listed on the US stock market, but the Chinese company's now planning a secondary listing in Hong Kong. Well, you canāt blame a tech giant for wanting to keep its options openā¦ What Does This Mean?Everything seemed to be going well between the US and China toward the end of 2019, when the two agreed to a truce that brought their years-long trade war closer to a resolution. But tensions have risen again this year with the two slinging mud at each other over the coronavirus outbreak and, more recently, Chinaās intention to limit Hong Kongās freedoms with a national security law.
The US president wasnāt happy with Chinaās decision, and nor was the Senate: itās since retaliated by passing a bill thatād bar Chinese companies from listing on US exchanges, and even go as far as to delist existing ones like Baidu, Alibaba, and NetEase. The latterās decision to list elsewhere, then, is its way of protecting its own interests if and when the bill actually goes ahead. Why Should I Care?For markets: Open sesame.
NetEase isnāt alone: JD.com, Chinaās second-largest online retailer, had the same idea. Both companies were likely emboldened by Alibabaās own hugely successful $11 billion share sale in Hong Kong last year. And seeing as some investors are worried Chinaās security law announcement will damage Hong Kongās status as a major financial center, both new listings could give the regionās markets a much-needed boost too.
The bigger picture: Playing hard to get.
There might be another reason Chinese tech companies are heading to Hong Kong. The regionās stock exchange used to have rules banning companies from listing if they had ādual-class share structuresā ā the kind popular among tech companies whose founders want to keep disproportionate voting rights. But after missing out on several major tech initial public offerings, the Hong Kong Stock Exchange decided to relax those rules almost a year ago to lure them back. | 