Home-field Advantage? How Hong Kong Secondary Listings Could Be A Powerful Yet Overlooked Catalyst
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The trend of US-listed Chinese companies pursuing secondary listings in Hong Kong continues to gain momentum. Over the past two years, trade negotiations and political headlines impacted valuations of US-listed Chinese companies. Listing closer to China may serve as a powerful yet overlooked catalyst for these companies as stock prices driven by local investors may align more with the business’ fundamentals.
Companies like Alibaba do not need to continually compare themselves to Amazon or explain their business models to Asia-based investors the same way they currently must with US investors. Potential advantages of a Hong Kong listing include higher valuations, increased flows from Mainland Chinese investors through Hong Kong Stock Connect programs, and convertibility between Hong Kong and US listings.
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