Shares of Chinese internet and gaming company Netease jumped 8.1% as they began trading in Hong Kong on Thursday. The company is one of a number of US-listed Chinese tech firms to pursue a second listing in Hong Kong.
Why it matters: The strong debut for Netease, China’s second-largest online gaming company after Tencent, is a good sign for companies that are looking at a dual listing.
- The Hangzhou-based company is the second Chinese tech company to complete a US-Hong Kong dual listing. It has been listed on the Nasdaq since 2000.
- E-commerce giant Alibaba began dual listing with a November 2019 Hong Kong IPO.
Details: Shares of Netease traded at HK$133 (around $17.2) shortly after the Hong Kong market opened at 9:30 am.
- The company previously priced its shares at HK$123 each, seeking to raise around $2.6 billion.
- In a ceremony held in Hangzhou, Netease founder and CEO Ding Lei said the secondary listing in Hong Kong is a “fresh start” for the company, according to local media. The Hong Kong market has “a better understanding of Netease,“ Ding said.
Context: The Hong Kong dual-listing trend came as the Trump administration threatened to order US markets to delist Chinese firms. Nasdaq-listed JD.com, a Chinese e-commerce firm, is also seeking to trade its shares in Hong Kong starting on June 18.
- The US and China have a long-running dispute about oversight of US-listed Chinese firms. China’s government does not allow the US Public Company Accounting Oversight Board (PCAOB) to view audit records of Chinese companies.
- The US Senate in May overwhelmingly passed a bill that could ban securities of foreign companies from the US financial markets if the audit watchdog is unable to access their audit records for three consecutive years.
- In a filing to the Hong Kong bourse on Monday, JD.com said the US government’s efforts to increase regulatory access to audit information could cause the company to face uncertainties, including a delisting from the US markets.
- “We could be delisted if we are unable to cure the situation to meet the PCAOB inspection requirement in time,” the company said.