Zhihu pays high price for its escape to Hong Kong
22/04/2022 04:47
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own. Refiles to fix coding and add links.)
HONG KONG, April 22 (Reuters Breakingviews) - What’s the
cost for U.S.-listed Chinese companies seeking to trade shares
in Hong Kong? Quora-like Zhihu’s https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.breakingviews.com%2Fconsidered-view%2Fchinese-firms-new-york-exit-hits-tricky-new-phase%2F&data=05%7C01%7CThomas.Shum%40thomsonreuters.com%7C68362a49f67c4055d95108da241211ea%7C62ccb8646a1a4b5d8e1c397dec1a8258%7C0%7C0%7C637861957273553861%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=WHhOBs54ZYB01Zhn6tG7BuZV6A%2BCEHDhqcmGt54KLC4%3D&reserved=0
ZH.N 2390.HK one-fifth fall on its Asian debut shows it can
be high. The $1 billion online Q&A forum is the latest in a
steady stream of Chinese firms with Big Board berths to seek an
escape route in case Washington pushes ahead with plans to eject
companies from New York if its watchdogs cannot inspect their
auditors – something Beijing has long resisted.
Zhihu, which floated in New York in March last year, was the
first such outfit to raise no new funds https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.breakingviews.com%2Fconsidered-view%2Fchinese-firms-new-york-exit-hits-tricky-new-phase%2F&data=05%7C01%7CThomas.Shum%40thomsonreuters.com%7C68362a49f67c4055d95108da241211ea%7C62ccb8646a1a4b5d8e1c397dec1a8258%7C0%7C0%7C637861957273553861%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=WHhOBs54ZYB01Zhn6tG7BuZV6A%2BCEHDhqcmGt54KLC4%3D&reserved=0
through its Hong Kong homecoming. Deals comprised solely of
existing shares tend to go down poorly, especially when the
sellers’ remaining stake creates an overhang, as this does.
Zhihu’s U.S. shares are down one-third since it launched the
Hong Kong sale, driving its market value below its $1.1 billion
net cash pile. Its Hong Kong experience raises questions over
the escape plans of other cash-rich Chinese firms in New York.
The answers are likely to be just as costly. (By Jennifer
Hughes)
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(Editing by Una Galani and Thomas Shum)
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