More technology firms in China may list their shares on US stock exchange rather than in Hong Kong after tech giant Alibaba Group Holding Ltd.’s successful initial public offering in New York in September, a top executive at global law firm DLA Piper said Tuesday.
“The Hong Kong Stock Exchange is still where most Chinese companies go to list, but with the performance of Chinese technology companies on NASDAQ and the New York Stock Exchange in the past 12 months, I would think Chinese entrepreneurs right now will be thinking long and hard about which is the best listing environment,” said Stephen Peepels, partner and head of US capital markets, Asia Pacific, at DLA Piper.
The single biggest thing that tech firms care about when they list their shares is where they can get a better valuation, Peepels said.
Most of the Chinese tech firms that listed in the United States are trading above their IPO price, while those that listed in Hong Kong are below their IPO price, he said.
Peepels said about 15 Chinese tech firms listed their shares in the US last year. The number is more than in the previous three years put together.
Although there are about 100 Chinese tech firms on the Hong Kong Stock Exchange, the US garnered some of the most high-profile listings, such as those of JD.com and Weibo Corp.
“In 2014, companies led by Alibaba rushed back to the United States for the first time in a long time,” Peepels said.
“All the negativity surrounding PRC companies listing in the United States that was dredged up by the short-selling research firm Muddy Waters and all the other comparable examples that really had a negative impact on Chinese listings — that certainly has gone away,” he said.
Peepels also cited other advantages of listing in the US, such as its acceptance of a dual-class share structure, a less stringent regulatory environment, lower IPO fees and the shorter time that listing procedures take. Hong Kong regulators subject listing applicants to stricter scrutiny.
He also said tech firms tend to look more to the US than to Hong Kong because most sophisticated technology investors follow the tech-heavy NASDAQ.
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