For China, Hong Kong IPOs start to look urgent

Foshan Haitian Flavouring and Food Co

09/01/2025 12:00

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Chan Ka Sing
       HONG KONG, Jan 9 (Reuters Breakingviews) - The next wave
of share sales in Hong Kong will come from Chinese
mainland-listed companies with global ambitions. Beijing’s
efforts to shore up the hub’s status as an international
financial centre helps, yet a narrowing of other fundraising
avenues also make offshore listings an imperative. 
    At least 20 companies have filed applications to trade
H-shares in Hong Kong. The herd includes pharmaceutical giant
Jiangsu Hengrui  600276.SS  and leading soy sauce producer
Foshan Haitian Flavouring & Food  603288.SS , with a combined
market value of nearly 600 billion yuan ($82 billion).
Battery-maker contemporary Amperex Technology Co. Ltd
 300750.SZ  also confirmed in late December it is planning a
listing, which could raise at least $5 billion, Bloomberg
reported, citing people familiar with the matter. 
   It's a blast from the past. Beer firm Tsingtao Brewery’s
 600600.SS  H-share offering in Hong Kong some 30 years ago
kicked off Chinese companies' initial public offering frenzy in
the former British colony. Yet, the pipeline dried up after most
of the biggest state-owned enterprises made their debuts. Tech
startups followed later, but such rising stars rarely emerge
these days following the Chinese government’s crackdown against
the sector started in 2020. 
    Things are picking up after Beijing rolled out a raft of
measures to speed up offshore listings. Thanks to a successful
offer of home appliance giant Midea  000333.SZ , which raised $4
billion in the city in September, secondary listings of Chinese
firms accounted for 51% of Hong Kong’s IPO fundraising last
year, per Hong Kong Exchanges and Clearing.
   Other traditional avenues for Chinese companies to raise
money are narrowing. Follow-on share offerings on the mainland
are generally discouraged because regulators want companies to
focus instead on boosting dividend payouts and share buybacks.
And while listings in New York and London remain sought after,
these face greater scrutiny because of the soured Sino-American
bilateral relationship. Offshore bond issuance by Chinese listed
companies also plunged to less than $7 billion in 2024, 82%
below the 2020 level, Dealogic data show. 
    This squeeze can benefit Hong Kong. Take Kweichow Moutai
 600519.SS . The spirits giant has for years talked up its
desire to become a global brand, and the slowdown in China
probably makes it even more keen to expand. It will be hard for
the company to venture far without access to foreign capital,
however. That sets up Hong Kong's next tailwind. 
    
    CONTEXT NEWS
        Chinese battery manufacturer CATL is planning to seek a
listing in Hong Kong, a Shenzhen Stock Exchange filing showed on
Dec. 26. The proposal is pending approval from regulators
including the China Securities Regulatory Commission, the
company said.
    Regulators in mainland China and Hong Kong told investment
banks to help speed up Chinese firms’ listings in the city in a
bid to boost fundraising overseas and revitalise the world’s
second-biggest economy, Reuters reported on Dec. 9, citing
sources who attended the meeting. 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic: Chinese mainland traded firms are rushing for Hong Kong
IPOs    https://reut.rs/3ZWwaQQ
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 (Editing by Una Galani and Ujjaini Dutta)
 ((For previous columns by the author, Reuters customers can
click on  CHAN/  
KaSing.Chan@thomsonreuters.com))