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There are two reasons that may push NetEase to file for listing in Hong Kong. One of them is the rising geopolitical tensions between the U.S. and China and the second one the success of Alibaba in rsising capital in Hong Kong.
Chinese online gaming firm NetEase Inc (NASDAQ: NTES) whose shares are already listed on the National Association of Securities Dealers Automated Quotations System, has announced they will push for a secondary listing in Hong Kong.
NetEase CEO William Ding, in a letter, revealed this. He noted that they are planning a secondary listing on the Stock Exchange of Hong Kong. This is about taking back their already known branch to China. He said he believes that NetEase going back to a market that is near where it originated from will aid their passion in their business and its users, Ding explained.
This push for secondary listing by the Chinese firm is coming at a time when U.S. authorities are properly scrutinizing Chinese firms listed in America. The regulator filing also does not include the amount of capital the NetEase will make or when the listing would happen.
China’s popular investment bank, China International Capital Corporation (CICC), Switzerland’s Credit Suisse, and America’s JPMorgan are all pulling resources together to back the listing.
Why NetEase Seeks for Listing in Hong Kong
Two major reasons could have necessitated the NetEase urge to push for a secondary listing in Hong Kong. It could be because of rising geopolitical tension between the U.S. and China or perhaps the success of Alibaba Group Holding Ltd (NYSE: BABA) recorded in raising capital in Hong Kong.
Firms also push for a secondary listing to access new markets and raise capital. However, NetEase is making this move when Chinese firms listed on Wall Street are threatened because of political issues between U.S. and China. Lawmakers in Washington also are clamoring that Chinese firms listed in America are observed more closely now.
The Senate also passed a bill termed Holding Foreign Companies Accountable weeks back. When this bill is eventually assented to, it requires foreign firms to certify that they are independent of government ownership or control and will face greater auditing measures.
Alibaba’s successful gamble in 2019 to raise capital in Hong Kong could also be NetEase’s reason. Alibaba’s Hong Kong shares are up around 10% from its 176 Hong Kong dollar listing price in November.
On the flip side, if NetEase, alongside Alibaba are listed in Hong Kong, it would serve as a boost for the market as there are fears that the city could lose its status as a financial hub following protests over a national security law proposed by China.