China’s No. 2 e-commerce company, JD.com Inc. has recently raised HK$30.1 billion (roughly $3.9 billion) in its latest share sale in Hong Kong, which marks the second-biggest listing in 2020. According to reliable sources, the listing follows recent trends where numerous Chinese firms are laying off plans for U.S. listings as the tensions between the biggest economies, the U.S. and China, intensifies.
Apparently, companies that were listed in NYSE and Nasdaq are looking to return to exchanges near home. JD.com, which already claims a listing on the Nasdaq, had hinted earlier that it would sell 133 million shares. As per the terms of the agreement, JD.com’s American depository shares would be equivalent to two Hong Kong shares.
As a result, the Hong Kong price shows a 3.9 percent discount in the company’s closing share price of US$60.07 on the Nasdaq. However, the retail aspect of the agreement is open till noon in accordance with Hong Kong’s time zone.
These share prices are a result of the Chinese online gaming company NetEase entering the Hong Kong listing. It recently began trading in Hong Kong after securing almost US$2.7 billion in its secondary listing. As for JD.com, its stock is expected to commence trading by June 18 which also coincides with the firm’s annual sales festival.
Escalating tensions between the United States and Chinese governments are intensifying risks for Chinese firms like NetEase and JD that are actively looking to expand their investor base. Additionally, Washington has hinted to restrict the access of Chinese firms to U.S. capital markets. It has also promised to implement tougher oversight on the financial reporting of Chinese firms. Luckin Coffee Inc. is a recent example of this as it crashed miserably amidst an accounting scandal.
In addition to this, there are also fears over the aftermath of national security legislation, which could instigate the resumption of protests being imposed in Hong Kong.
Source Credit: https://www.channelnewsasia.com/news/business/jd-com-raises-us-3-87-billion-in-hong-kong-secondary-listing-12825250#:~:text=JD.com%20raises%20US%243.87%20billion%20in%20Hong%20Kong%20secondary,direct%20knowledge%20of%20the%20matter.