Hong Kong is on the edge right now
Companies could list Hong Kong or Chinese domestic markets if, according to commentators, the U.S. places constraints on investment in China.
The White House is allegedly contemplating some restrictions on U.S. investment in China in the context of a long trade conflict between the two nations. This involves deleting Chinese stocks in the United States and restricting investment by government pension funds in the Chinese economy.
If that happens, it could impact not only the Chinese but also the U.S. economies, said EY’s Ringo Choi, Asia Pacific IPO chief.
“It would… harm everyone, “he said. “But if they did, I believe a number of businesses will come to Hong Kong, plus a list in national economies like the STAR Board.” Choi referred to China’s Nasdaq-style tech board, which was introduced in July — named the Science and Technology Innovation Board, or “STAR Market.”
Shares of Alibaba, Baidu and other Chinese companies mentioned in the U.S. collapsed after the news.
Investment blockage in China is a threat to others
Pivoting back from the US would be excellent news for Hong Kong, which saw revenues from original government products fall by 46.8% relative to the same era last year, according to information from Refinitiv. It’s also the smallest since 2017, according to Refinitiv.
In a notice on Monday, Singapore Bank DBS pointed out that there are several listing possibilities available to Chinese companies, including Hong Kong.
“Since Chinese shares have several alternative placement choices, varying from London to Hong Kong to the ever-growing on-shore industry, leaving access to the US would be serious but not destructive,” said the strategists Philip Wee and Eugene Leow.
China offers the second-largest equity market in the world, just behind the US. They expect more overseas money to flow into overseas Chinese stocks, including significant stock indices such as the worldwide inventory supplier MSCI and the Bloomberg Barclays Global Aggregate Index.
Including Chinese stocks in such indices means that many American investors have access to Chinese markets through mutual funds and other products.
Many Chinese companies also register in the U.S., which is traditionally a more appealing investor setting, with stronger valuations and a more knowledgeable investor base.