21 May 2019
Ascletis Pharma chairman Jason Wu celebrates his firm's listing under the new rules of the Hong Kong Stock Exchange on Aug. 1. Photo: Bloomberg
Ascletis Pharma chairman Jason Wu celebrates his firm's listing under the new rules of the Hong Kong Stock Exchange on Aug. 1. Photo: Bloomberg

HK bourse poised to attract many more biotech companies

The Hong Kong Stock Exchange (HKEx) has recaptured its title as the world’s top market for initial public offerings. 

After placing third behind Nasdaq and the Shanghai Stock Exchange last year, HKEx carried out its biggest listing reform on April 30, marking its biggest overhaul in 25 years, which allows dual-class share listings and pre-revenue biotech companies to list on the Main Board.

As a result, Hong Kong was able to attract the listing of three mega blockbusters: China Tower Corp. Ltd. (00788.HK),  Xiaomi Corp. (01810.HK), and Meituan-Dianping (03690.HK). Both Xiaomi and Meituan-Dianping have opted for a weighted voting rights structure.

Pre-revenue biotech firms, part of the “new economy” industry that used to account for less than 3 percent of all Hong Kong-listed stocks by capitalization, saw its first emergence when Ascletis Pharma Inc. (01672.HK) was listed on the Main Board under the new rules on Aug. 1.

As compared to Nasdaq where new economy companies account for 60 percent by capitalization, Hong Kong has only just begun.

Three new chapters have been added to the HKEx’s Main Board listing rules, of which Chapter 18A is designed to attract pre-revenue biotech companies. It embraces and encourages pre-revenue biotech companies to list on the Main Board, which was previously not allowed in Hong Kong but common in Nasdaq.

These new listing rules are a breakthrough in terms of the listing threshold of financial tests and have exhibited innovations in the concept of regulation, fostering development of the capital markets, which strengthen Hong Kong’s position as a world-leading fundraising venue and international financial center.

With the new listing rules in place, there are three competitive advantages that set HKEx apart from Nasdaq: 1. Hong Kong is close to mainland China and is regarded as a home field of the Chinese biotech companies. 2. The proximity brings better convenience for mainland capital to invest in the biotech sector. 3. In the short to medium term, the valuation on HKEx would be more favorable to the issuers than on Nasdaq.

Following the example of Ascletis Pharma, which was the first pre-revenue biotech company to list in HKEx, there are now dozens of high-quality Chinese biotech companies initiating the IPO process in the city.

As the first IPO under Chapter 18A, the transaction has set a precedent; it sets the standard forms for other biotech companies seeking to list in Hong Kong. With a mature operation mechanism, professional investors and favorable policies, Hong Kong is the venue of choice for the listing of Ascletis Pharma, and of more biotech companies to come.

With more Chinese biotech companies planning to list in the city rather than on Nasdaq, the Hong Kong stock market is poised to be the home for many more biotech companies.

– Contact us at [email protected]


Partner and Chief Representative of the Corporate Department of Paul Hastings in Beijing

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