CHINESE companies that once pursued additional listings in Europe are abandoning those plans after Beijing’s securities regulator tightened some rules, pushing many issuers to sell shares in Hong Kong instead.
Take Contemporary Amperex Technology Co Ltd (CATL). The car-battery giant considered selling at least US$5 billion of global depositary receipts in Switzerland, people familiar with the matter said in 2023. But the deal never materialised after the China Securities Regulatory Commission (CSRC) was said to have held it up.
Shenzhen-listed CATL, as the company is known, is now preparing for a jumbo Hong Kong listing instead. Former GDR aspirants such as CATL supplier Wuxi Lead Intelligent Equipment and drinks maker Eastroc Beverage Group also have similar plans.
More broadly, the aversion shown by Chinese issuers is yet another sign of Europe’s diminishing popularity as a listing destination – even by its own firms. Glencore recently said it’s studying whether move its primary listing away from London, following the likes of Ashtead Group and FanDuel parent Flutter Entertainment.
The CSRC has restarted GDR approvals after laying out new rules such as having to disclose the identities of buyers. But the regulatory changes haven’t been well received by Chinese companies, with their number of GDR issuances plunging afterwards
“GDR rules are getting much more stringent,” said Mandy Zhu, Asia vice-chairman of global banking at UBS Group. “GDR applicants dropped significantly after the new rule came out, making their execution more complicated.”
Still, the CSRC has continued to pledge its support for European issuances. Renewable-energy firm Sungrow Power Supply and solar-panel maker JinkoSolar Holding are among companies that announced plans last year to raise cash in Frankfurt. Chinese and German exchanges have also signed a preliminary agreement over depositary receipts.
A strong pivot towards Hong Kong, however, is a trend that may last as Beijing’s support makes the financial city a share-sale venue for many mainland companies. “Regulators have been showing strong support to Hong Kong listings,” said Mengyu Lu, who leads Kirkland & Ellis’ Asia capital-markets practice. BLOOMBERG
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