Briefing: Hong Kong likely to remain preferred board for Chinese biotech IPOs

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Shanghai tech board unlikely to challenge Hong Kong’s status as preferred IPO hub for Chinese biotech firms – SCMP

What happened: Hong Kong will likely retain its status as a biotech IPO hub, even after the debut of the soon-to-launch Shanghai tech board, according to investment bankers. The ongoing trade war will likely affect the valuation of Chinese biotech firms but will not prevent them from going public, according to Philip Ross, JPMorgan’s vice-chairman of investment banking. Ross expects to see at least 10 Chinese biotech firms listed in Hong Kong or Shanghai in the coming 12 to 18 months. Others believe that Chinese biotech companies will likely first consider Hong Kong as an IPO destination because it is a proven source for successful fundraising.

Why it’s important: Hong Kong’s stock exchange has been trying to position itself as an IPO hub for Chinese technology companies. Last year, the stock exchange underwent a significant reform to attract Chinese companies, including pre-revenue biotech firms. HKEX’s chief executive Li Xiaojia said last year that the exchange is planning to overtake Nasdaq in the US as the top destination for Chinese biotech firms by 2023. However, it has a ways to go: Last year, seven biotech firms listed on the HKEX, compared with Nasdaq, which attracted 57 biotech IPOs. The new Shanghai tech board, which will launch as early as June, will likely ramp up the competition.