Facing delisting in US, Ping An associate chooses HK

OneConnect Financial Technology Co Ltd, a technology-as-a-service provider for financial institutions in China and an associate of Chinese financial conglomerate Ping An Insurance (Group) Co of China Ltd, announced on Monday it has successfully listed, by way of introduction, its ordinary shares on Hong Kong Exchanges and Clearing Ltd (HKEX).

Listing by way of introduction is a way of listing shares already in issue on another exchange.

Shen Chongfeng, director and CEO of OneConnect, said: "While expanding our base of financial institution customers, we have also been extending our services to broader customer groups and into wider regions. Based in the Chinese mainland, we have a presence in Hong Kong and have conducted outreach across Southeast Asia. We provide a variety of fintech products and services to financial institutions, governments, regulators and large enterprises. OneConnect continues to contribute to the quality development of the digital economy."

The Hong Kong listing of One-Connect comes as an increasing number of US-listed Chinese mainland companies are going public in Hong Kong.

The US Securities and Exchange Commission has been targeting US-listed Chinese companies since the beginning of this year. As of Thursday, 150 US-listed Chinese companies, including OneConnect, representing more than half of all US-listed Chinese companies, had been put on the conclusive list of issuers identified under the Holding Foreign Companies Accountable Act for allegedly failing to meet US audit requirements stated in the act.

Companies on the list face the risk of being delisted from US stock exchanges as early as 2024 if they do not allow their audits to be inspected by the Public Company Accounting Oversight Board, although top regulatory bodies of the two countries continue talks to settle the dispute.

Earlier this year, electric vehicle maker NIO Inc and KE Holdings Inc, an integrated online and offline platform for housing transactions and services, listed their Class A ordinary shares, by way of introduction, on HKEX. Zhihu Inc, a leading online content community in the Chinese mainland, raised HK$833 million ($106 million) in its dual primary listing in Hong Kong. The company, providing services similar to Quora Inc, is also listed in New York.

Only three Chinese companies listed in the US in the first half, compared with 38 in the same period last year, suggesting Chinese firms' enthusiasm for US bourses is on the wane. The three IPOs raised $80 million in all, down 99 percent year-on-year, according to Deloitte, a global provider of audit, accounting, tax and advisory services.

"Many US-listed Chinese mainland companies are keen to explore different types of listing in Hong Kong－dual primary listing, secondary listing, by way of introduction and so forth. Some may seek relisting in Hong Kong by being merged or acquired by a special purpose acquisition company after delisting from the US stock market," said Li Sijia, an audit and assurance partner at Deloitte.

Chen Zhuo, associate professor at Tsinghua University PBC School of Finance, said, "It is estimated that an increasing number of US-listed Chinese mainland companies that meet the criteria will seek a secondary listing or a dual primary listing in Hong Kong before the authorities in the Chinese mainland and the US reach a consensus on cross-border audit regulation, but we do not exclude the possibility that they may get listed in overseas exchanges such as the Singapore Exchange or the mainland's Nasdaq-style sci-tech innovation board, known as the STAR Market."

Analysts at China International Capital Corp Ltd said they expect that more and more overseas issuers will choose dual primary listings, in addition to secondary listings, as a way to seek a safety cushion to withstand delisting risks from an overseas exchange.

The issuers will gain recognition from international investors to the maximum extent possible and increase their influence on international markets. They will also find it easier to meet regulatory requirements in the A-share market to be included in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect programs, CICC analysts said in a report in May.