Mainland Companies Flocking to HKSE for Listings, Sustained Increase in Momentum

Financials Author: EqualOcean News, Jiahui Liao Editor: Yiru Qian Feb 20, 2024 02:56 PM (GMT+8)

In February, 14 companies have submitted applications to the Hong Kong Stock Exchange, indicating a growing interest in Hong Kong listings among mainland unicorns.


Since the beginning of 2024, there has been a sustained increase in the number of companies applying for IPOs on the Hong Kong Stock Exchange.

As per the latest statistics from the Hong Kong Stock Exchange website, as of February 14th, there have been a total of 14 companies submitting applications to the Hong Kong Stock Exchange in February, averaging one company per day. A review by a journalist from the Shanghai Securities News found that in January of this year, 14 companies also submitted applications to the Hong Kong Stock Exchange.

On February 14th, Auntea Jenny submitted a prospectus to the Hong Kong Stock Exchange, intending to list on the main board. Previously, ChaPanda, Mixue, and GoodMe had also submitted prospectuses to the Hong Kong Stock Exchange.

According to investment bank professionals, if the materials are well-prepared and meet the listing conditions, it is expected that these four tea beverage companies will be listed on the Hong Kong Stock Exchange in the first half of this year.

Among the companies that submitted applications for a Hong Kong IPO in February are two biopharmaceutical companies, TongKang Medical and Hangzhou Jiuyuan Gene Engineering. In January, there were five biopharmaceutical companies that submitted applications for a Hong Kong IPO, including Taimei Medical and Beijing Health Guard Biotechnology.

Securities investment bank professionals have indicated that among the characteristics of the companies submitting applications, mainland companies intending to list in Hong Kong this year are mainly from the "clothing, food, housing, and transportation" sectors, as well as from artificial intelligence, and the unprofitable biopharmaceutical industry.

In recent years, mainland companies have become the main force behind Hong Kong IPOs. In 2023, over 90% of the newly listed companies on the Hong Kong Stock Exchange were from the mainland.

Looking at the companies listing in Hong Kong so far this year, out of the 5 companies that have already been listed, 4 have their offices located in the mainland. Among these, WellCell, Changjiu, and RoboSense are from the software and service industry, while Zhongshen Jianye is from the construction industry. The total amount raised by these 4 companies is 1.54 billion Hong Kong dollars.

Previously, Wang Jianjun, Vice Chairman of the China Securities Regulatory Commission, pointed out at the International Financial Leaders Investment Summit held in Hong Kong that Hong Kong has truly become the home of Chinese concept stocks.

According to data from the Hong Kong Stock Exchange, as of the end of July 2023, there were 1432 mainland companies listed on the Hong Kong Stock Exchange, accounting for over 50% of the total number of listed companies. The market value of mainland companies accounted for 77.2% of the total market value of H-shares, with a trading volume accounting for 87.6%.

Wang Jianjun previously expressed to the Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, that the China Securities Regulatory Commission would support the development of Hong Kong's capital market. He stated that as long as it is beneficial to the Hong Kong capital market and conducive to consolidating and enhancing Hong Kong's status as an international financial center, the China Securities Regulatory Commission will spare no effort.

In recent years, the efficiency of the Hong Kong IPO application review process has been relatively high. According to disclosures, in the three years up to June 30, 2023, the Securities and Futures Commission of Hong Kong completed the review of 389 listing applications, with 92% of the applications requiring a review time of less than 60 business days (including the time taken to provide multiple rounds of comments).

In addition, the review speed of IPO listings on the Hong Kong Stock Exchange is relatively fast. Wang Rongkun, CEO of Huaxia Securities Hong Kong, stated that based on statistical patterns, Hong Kong IPO applications typically require 6 to 9 months for approval and review. The faster listing speed provides mainland companies with a faster financing channel.

As of February 19th, there are 75 pending listing applications being processed by the Hong Kong Stock Exchange. Industry insiders believe that mainland unicorn companies in artificial intelligence, biotechnology, and new consumption sectors will lead a surge in Hong Kong listings in the future.

"Currently, the Hong Kong stock market provides a better 'listing harbor' for mainland unicorn companies," said Yan Zhaojun, a strategist at Zhongtai Financial. From December 2023 to January 2014, a number of unicorn companies, such as REPT, iMotion, UBTECH, and RoboSense, were listed, creating a small wave of Hong Kong IPOs.