HONG KONG – China’s No 2 online retailer JD.com has filed for a secondary listing in Hong Kong, hot on the heels of NetEase’s US$2.7 billion (S$3.8 billion) share sale in the city, as the US-listed firms seek a foothold closer to home amid rising US-China tensions.
The move is also a major win for the financial hub despite swirling fears over Beijing’s plan to impose a national security law on the city.
JD.com filed a preliminary prospectus on Friday (June 5) with the Hong Kong stock exchange, which doesn’t contain any share sale details. The company could launch the offering to raise at least US$2 billion as soon as next week, Bloomberg News has reported. The filing comes on the same day online gaming firm NetEase told prospective investors it was planning to price its Hong Kong listing at HK$123 each.
Escalating tensions between Washington and Beijing are increasing risks for Chinese companies like JD and NetEase who seek to broaden their investor base. US capital markets are becoming frosty toward Chinese firms, and there have been fears over the impact of national security legislation set to be imposed on Hong Kong, including the resumption of protests in the city.
The twin debuts would follow Alibaba Group Holding’s US$13 billion Hong Kong stock sale last year, hailed as a homecoming for Chinese companies and a win for the Hong Kong stock exchange, which lost many of the largest tech corporations to US bourses because it didn’t allow dual-class share voting at the time – a requirement that’s since been relaxed.
Amid rising US-China tensions, US Secretary of State Mike Pompeo on Thursday warned American investors against fraudulent accounting practices at China-based companies and said the Nasdaq’s recent decision to tighten listing rules for such players should be “a model” for all other exchanges around the world.
His remarks on the issue illustrate the Trump administration’s desire to make it harder for some Chinese companies to trade on exchanges outside of China.
US President Donald Trump issued a memorandum on Thursday calling for recommendations to be issued within 60 days to protect US investors from what he said was China’s failure to allow audits of US-listed Chinese companies.