The escalating geopolitical risks are introducing more uncertainties for US-listed Chinese stocks (hereinafter referred to as “Chinese concept stocks”). Recently, Hong Kong’s Financial Secretary Paul Chan Mo-po mentioned in an essay titled “Another Opportunity for Hong Kong Amidst a Century of Changes” that he has instructed the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited to prepare for the potential return of overseas-listed Chinese concept stocks, ensuring Hong Kong becomes their preferred listing destination.
In fact, Hong Kong has been the top choice for many Chinese concept stocks seeking to return for years. According to incomplete statistics from Wind, 31 Chinese concept stocks have chosen to list in Hong Kong between 2018 and 2024, achieving dual listings in both the US and Hong Kong. These companies account for the majority of the total market capitalization of Chinese concept stocks. With the Hong Kong Exchange extending further olive branches, the market is closely watching whether the remaining Chinese concept stocks will prepare for listings in Hong Kong. Currently, there are only 19 US-listed Chinese concept stocks with a market capitalization of no less than RMB 10 billion that have not yet listed in Hong Kong, with a combined market capitalization exceeding RMB 1.5 trillion. Among them, Pinduoduo alone accounts for nearly RMB 1 trillion. For Chinese companies still planning to list in the US, the path of capital operations remains fluid and subject to change. Over 70% of Chinese concept stocks have already returned to Hong Kong. Since the first US-China trade tariff friction in 2018, the delisting risks for Chinese concept stocks have been a concern. The enactment of the US Holding Foreign Companies Accountable Act in 2020 further heightened market attention to these risks. Two years later, the US Securities and Exchange Commission (SEC) placed over 120 Chinese concept stocks, including Pinduoduo, JD.com, NetEase, and XPeng Motors, on its provisional delisting list. Although actual delistings did not materialize, many Chinese concept stocks have proactively sought alternatives, such as returning to A-shares or Hong Kong listings, to mitigate potential policy risks. Most Chinese concept stocks returning to A-shares opt for privatization from US markets or transition to over-the-counter (OTC) trading. According to Wind, 16 Chinese concept stocks have returned to A-shares since 2018, with the STAR Market being the preferred choice for many. Seven Chinese concept stocks, including innovative pharmaceutical company BeiGene (688235.SH) and Fudan Microelectronics (688385. SH), have relisted on the STAR Market. This preference is attributed to the STAR Market’s financial inclusivity—launched in 2019, it allows unprofitable companies and those with red-chip structures (including VIE) to list, breaking traditional A-share financial barriers. This even attracted US tech company Pixelworks (PXLW.US), which planned to spin off its Chinese subsidiary, Pixel Semiconductor (Shanghai) Co. , Ltd., for a STAR Market listing.In 2023, Pixelworks Semiconductor submitted IPO materials to the securities regulator but has yet to enter the formal IPO application stage. Meanwhile, more Chinese concept stocks are opting to list on the Hong Kong Stock Exchange. According to incomplete statistics from Wind, 31 Chinese concept stocks have achieved dual listings in the U.S. and Hong Kong between 2018 and April 2025, with the peak occurring between 2020 and 2022, witnessing 9, 8, and 11 companies returning respectively.
These returning companies represent the backbone of Chinese concept stocks. As of April 14, the total market capitalization of these 31 companies stood at 4.94 trillion yuan, compared to 6.86 trillion yuan for the 387 Chinese concept stocks overall, indicating that over 70% have completed their return to Hong Kong. The acceleration of this trend is tied to the institutional红利 released by the Hong Kong Stock Exchange seven years ago. In 2018, the exchange introduced the Secondary Listing, allowing companies already listed on major overseas exchanges (NYSE, Nasdaq, LSE) to trade on the Hong Kong market via depositary receipts (DRs). This gave rise to two primary pathways for Chinese concept stocks to return to Hong Kong: 1. Secondary Listing: Under this framework, companies can retain their original accounting standards and are exempt from certain shareholder approval and disclosure obligations for and, significantly reducing regulatory burdens. If delisted overseas, secondary-listed issuers are reclassified as primary-listed issuers, enabling U.S. investors to convert ADRs into Hong Kong shares to mitigate risks. This model has been widely adopted, with Wind reporting that 19 companies, including Alibaba, JD.com, NetEase, Baidu, and Trip.com, chose this route between 2018 and 2024, accounting for over 60% of returning stocks. For example, Tencent Music listed in Hong Kong via secondary listing in 2022 without raising capital but expanded its investor base to hedge against U.S. regulatory risks. 2. Dual Primary Listing: This involves simultaneous listings on two or more exchanges, with each independently complying with all local rules and requirements.Dual listing and secondary listing are not mutually exclusive. Some US-listed Chinese companies have opted for secondary listings in Hong Kong before transitioning to dual listings to further integrate into the Hong Kong market. Among the 19 US-listed Chinese companies that have returned to Hong Kong, seven—including Alibaba, Bilibili, Yum China, and ZTO Express—initially pursued secondary listings before converting to dual listings.
Dual listings offer more significant comparative advantages. While secondary listings feature streamlined processes and lower operational costs, they are ineligible for inclusion in the Stock Connect program, limiting access to mainland institutional funding and potentially hindering trading convenience and liquidity. Market expectations suggest that if US policy risks escalate, more US-listed Chinese companies may prioritize dual listings for their Hong Kong returns. According to incomplete statistics from Wind, 19 US-listed Chinese companies with market capitalizations exceeding RMB 10 billion have yet to return to Hong Kong. Their combined market cap surpasses RMB 1.5 trillion, including prominent firms like Pinduoduo, Amer Sports, Futu Holdings, and Full Truck Alliance. Pinduoduo alone accounts for over half of this total market cap. As of April 14, its market cap exceeded RMB 940 billion, representing more than 60% of the 19 companies. Despite speculation in June 2020 about Pinduoduo’s potential secondary listing in Hong Kong, the company denied any discussions with intermediaries or exchanges. Should Pinduoduo successfully return to Hong Kong, the remaining 18 companies would represent less than 10% of the total market cap of US-listed Chinese stocks. Returning to Hong Kong from the US market can yield substantial financing benefits. In 2018, BeiGene raised RMB 6.17 billion in its Hong Kong IPO, nearly six times its US listing proceeds two years prior. Similarly, Bilibili’s 2021 Hong Kong IPO raised RMB 19.56 billion, over six times its 2017 US fundraising. The Hong Kong market continues to rebound, with 15 IPOs raising HKD 18.2 billion in Q1 2025—a nearly threefold year-on-year increase—ranking fourth globally behind Nasdaq, NYSE, and the Tokyo Stock Exchange. Valuation disparities between US and Hong Kong markets are minimal. As of April 14, the median TTM P/E ratios for these 31 US-listed Chinese stocks were 10.56x in the US and 10.45x in Hong Kong. For instance, Alibaba’s TTM P/E ratios in both markets were 16x.27x and 15.92x. This is related to the share conversion mechanism for dual listings. Since U.S. investors can convert their holdings of China-concept ADRs into Hong Kong ordinary shares at a predetermined ratio, it minimizes arbitrage opportunities between the two markets, leading to similar valuations.
For companies planning an IPO, how to strategize their overseas listing route remains a critical decision. Many domestic companies continue to pursue U.S. listings. On April 17, Chinese new tea beverage company CHAGEE will debut on Nasdaq under the ticker “CHA,” aiming to raise between RMB 2.8 billion and RMB 3 billion. This year, no fewer than 30 China-concept stocks have listed in the U.S. market. However, given the current geopolitical climate, more capital operation strategies may emerge. One approach is to list in Hong Kong first and then seek U.S. financing based on business development, serving as a relatively conservative alternative. For instance, Ascentage Pharma (6855.HK), an innovative drug company that listed in the U.S. earlier this year, had already gone public in Hong Kong, becoming the first biopharma company to adopt a “Hong Kong first, U.S. later” strategy. Another option is to pursue targeted spin-off listings in different markets. Companies can separate their domestic and overseas operations into distinct entities. The domestic business entity can list in Hong Kong, while the overseas entity can list in the U.S. or pursue a dual listing in both markets to mitigate potential risks. Some companies have already adopted this approach. In 2022, hotpot chain Haidilao (6862.HK) spun off Super Hi International (9658.HK) for an independent Hong Kong listing. Super Hi International manages Haidilao’s operations outside mainland China, Hong Kong, Macau, and Taiwan, and is set to list on Nasdaq in 2024, achieving a dual listing in Hong Kong and the U.S. However, such strategies depend on the scale of a company’s overseas operations. For smaller-scale businesses, the practical significance may be limited. Overall, geopolitical volatility and market uncertainties remain a Sword of Damocles for Chinese companies, necessitating careful consideration. (Intern Zhao Qian also contributed to this article.) Risk Warning and Disclaimer: The market carries risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not account for individual users’ specific investment objectives, financial situations, or needs. Users should assess whether any opinions, views, or conclusions herein align with their circumstances. Investments made based on this article are at the investor’s own risk.
