Many well-known Wall Street names are not among the U.S.-listed Chinese stocks with the highest share of American requests.
However, according to a Morgan Stanley report published on December 9, most of the affected stocks have low levels of U.S. ownership. Even those with more American cash do not include well-known names like Alibaba. Biotechnology companies BeiGene and Zai Lab, KFC parent Yum China, and dating app operator Hello Group are among the top five names in terms of U.S. ownership. The fifth name, JOYY, refers to a live streaming company previously known as Y.Y.
According to Morgan Stanley data for stocks eligible for a secondary listing in Hong Kong, the top ten names have a median share of U.S. ownership of 43 percent. The top 50 names have a median of 27%.
Alibaba has a much lower share of 13.1 percent, while Chinese electric car start-up Nio has a slightly higher percentage of 20.4 percent. Chinese companies such as Alibaba, Trip.com, and Baidu have held secondary stock offerings in Hong Kong.
However, the report revealed that more than 40 Chinese stocks listed in the United States would be unable to list in Hong Kong in the next two years because they do not meet the exchange’s requirements for market value, profit, and other metrics.
U.S.-listed Chinese stocks ineligible
In recent months, the Chinese government has made it more difficult for Chinese companies to list in the United States by requiring additional data security reviews.
Didi, the Chinese ride-hailing app, had to suspend new user registrations days after its IPO in the United States in late June due to a government review. Earlier this month, the company announced its intention to delist from the New York Stock Exchange and list in Hong Kong.
Meanwhile, pressure on Chinese stocks is increasing in the United States. Earlier this month, the Securities and Exchange Commission completed the preliminary procedures needed to begin the delisting process for Chinese stocks that do not allow a U.S. government audit of three consecutive years of financial reports.
On the other hand, Morgan Stanley analysts do not anticipate forced delistings until at least 2024. Such changes will have a more significant impact on institutions and non-American investors. According to Morgan Stanley analysts, U.S. retail investors account for only about 13 percent of U.S. trading volume in Chinese stocks listed there.
