Aug 06, 2019 (China Knowledge) - Chinese stock exchanges published draft regulations last Friday that will bring stocks with different classes of voting rights into the trading links between Mainland China and Hong Kong.
The new rule will allow domestic investors to buy shares of some of China's popular technology startups listed in Hong Kong for the first time. One of the potential examples is Alibaba Group Holding Ltd (BABA), which is said to raise USD 20 billion for a Hong Kong listing with the new regulations.
As several major tech firms like Xiaomi (01810) has used this new rule which permit dual-class shares to go public in Hong Kong last year, China’s authorities have been trying to find ways to keep the country's tech companies at home. Plans for depositary receipts are expected to allow dual-class shares which are not permitted on its major exchanges, to trade onshore. The recent STAR Market could be a new trial for such structure.
According to the draft proposal, companies which could be included in the stock connect should be listed in Hong Kong for at least six months. Additionally, the average daily market value of the company should be at least HKD 20 billion (USD 2.56 billion) and at least HKD 6 billion in total transaction value.
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