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Delisting pressure on US-listed companies from the mainland could be a jackpot for Hong Kong markets

A month ago, Patrick Tsang, the CEO of Deloitte China, learned that the US government had declined to rule out the possibility that Washington could delist Chinese stocks from American exchanges.

For Tsang, a long-time accountant who is also a member of Chief Executive John Lee Ka-chiu’s policy unit, the delisting threat seemed like a golden opportunity for Hong Kong.

Around 286 mainland ­companies trading in the US came under threat of delisting after Treasury Secretary Scott Bessent said in early April that “everything’s on the table”, as worries about decoupling emerged amid a US-China tariff war.

Tsang immediately rounded up a capital markets team at Deloitte to produce proposals on how Hong Kong could prepare for the situation.

Last week, he submitted a paper to the Chief Executive’s Policy Unit, outlining four major strategies to bolster Hong Kong’s financial preparedness, including simplifying listing procedures and finding funding for these companies.

“Even if China and the US reach an agreement on tariffs, the risk of delisting for many Chinese firms listed in the US persists,” Tsang said. “Delisting remains a tool in the ongoing US-China trade dispute.”

Tsang said Hong Kong must leverage its “one country, two systems” framework and its status as an international financial centre “to provide a safety net for US-listed mainland firms facing potential delisting”.

Zeekr, an electric-vehicle unit of Geely Auto, China’s second-largest carmaker, became the first mainland company after the trade war heated up to say it would delist from the US by going private, according to a May 7 exchange filing.

Tsang said some of Deloitte’s clients have started preparing for delisting.

“Some existing clients have planned to delist in the US and list in Hong Kong instead,” he said. “For the listing candidates, there are now fewer than 5 per cent who want to list in the US, compared with before when there were about 20 per cent who would like to list in the US.”

“Hong Kong is the market they want to come to raise funds and some investment banks have set up special teams to support these clients.”

Last month, Financial Secretary Paul Chan Mo-po asked Hong Kong Exchanges and Clearing (HKEX) and the Securities and Futures Commission (SFC) to prepare for the US-listed companies to come to Hong Kong.

“In response to the latest geopolitical changes, the government has directed HKEX and the SFC to be prepared to make Hong Kong the preferred listing destination for the return of [US-listed mainland stocks],” said Secretary for Financial Services and the Treasury Christopher Hui Ching-yu in a written interview.

Hui said the SFC and HKEX would push ahead with reforms, including reviewing listing requirements, improving vetting processes, optimising the thresholds for dual primary and secondary listings, as well as other matters.

“This comprehensive review aims to facilitate listing and fundraising of overseas enterprises and companies from emerging industries, the return of [US-listed mainland firms] as well as fundraising and development of mainland enterprises overseas,” Hui said.

HKEX chairman Carlson Tong Ka-shing said the bourse operator was committed to facilitating the listing of high-quality firms in Hong Kong, including US-listed mainland companies.

“HKEX has an established framework for overseas-listed companies to seek a primary or secondary listing in Hong Kong, and we will continue to closely monitor global developments,” Tong told the Post.

Tong said the China Securities Regulatory Commission last week pledged to support “the homecoming” of mainland firms listed overseas.

“This development is encouraging, as we expect more companies to seek dual listings in Hong Kong, further strengthening the city’s position as a premier [IPO] and capital markets hub,” Tong said.

In 2018, HKEX introduced reforms to allow pre-revenue biotechnology firms and companies with different share classes to list in the city.

Since then, some 360 new-economy firms have raised HK$1.03 trillion (US$133 billion) in Hong Kong via initial public offerings, including 33 US-listed mainland firms seeking dual primary or secondary listings, according to HKEX data.

These reforms made listings possible for mainland smartphone maker Xiaomi and online food delivery platform Meituan – which have multiple share classes – and Alibaba Group Holding, owner of the Post.

In 2023, HKEX introduced the Chapter 18C listing rule, allowing specialist technology firms with little to no revenue to list. Subsequently, three firms have raised a total of HK$2.9 billion, according to HKEX data.

A total of 33 firms trading in the US and Hong Kong are heavyweights, as they account for 70 per cent of the total market capitalisation of all US-listed mainland firms, HKEX data showed.

“The focus is now on how to attract the others … interested in being listed in Hong Kong to list here,” said Joseph Chan Ho-lim, the undersecretary for financial services and the treasury, in a Legislative Council meeting on May 7.

E-commerce platform operator PDD Holdings and ­brokerage Futu Holdings were among 27 US-listed mainland firms that met Hong Kong listing ­requirements, while at least 170 others may be at risk of exiting the US, Goldman Sachs said in a report last month.

“HKEX’s many listing reforms in recent years have enhanced the attractiveness of Hong Kong as a listing venue for new-economy and biotechnology companies, while the increased market turnover this year also helps attract these US-listed mainland firms,” said John Lee Chen-kwok, vice-chairman and co-head of Asia coverage for global banking at UBS.

In the first four months of this year, daily trading turnover in the city surged 144 per cent from a year earlier to HK$250.4 billion, thanks in part to a rally that came after artificial intelligence start-up DeepSeek’s low-cost, high-performance large language models captured global attention.

Fifteen companies raised US$2.3 billion from IPOs in the first three months of 2025, according to data from the London Stock Exchange Group. That was the best quarterly performance since the second quarter of 2021 when proceeds totalled US$11.5 billion.

Chan Ka-keung, the chairman of digital lender WeLab Bank and Hong Kong’s former secretary for financial services and the treasury, said recent US regulations have helped drive start-ups to come to Hong Kong.

“Traditionally, most start-ups like to list in the US for its simple regulations, high valuation, and deep liquidity,” he said. “But the introduction of US regulations in recent years and the latest threat of delistings have reduced the attractiveness of the US market.”

“What Trump’s administration is doing is, in fact, good for Hong Kong’s IPO market.”

During Donald Trump’s first term as US president, he introduced the Holding Foreign Companies Accountable Act in December 2020. It required foreign companies to fall in line with audit inspection rules or face expulsion from US exchanges after three consecutive years of non-compliance.

This led to a wave of US-listed mainland firms, including JD.com and NetEase, to seek primary or secondary listings in Hong Kong. In 2022, the US and China reached an agreement on audit inspections in the city.

“The renewal of the threat of delisting has led many firms to reconsider listing in Hong Kong again so their shares can continue to be traded by international investors,” WeLab’s Chan said.

“I believe the US only uses the delisting threat as a tool of negotiation for trade deals, but the threat itself is already enough to help Hong Kong get more new listings.”

He also said the Chapter 18C listing rule has provided flexibility for start-ups to list, while the DeepSeek breakthrough attracted international investors to chase tech stocks in Hong Kong.

But David Chang, the founder and CEO of MindWorks, a venture capital firm focused on start-ups, said Hong Kong needs to speed up its approval process if it wants to attract more listings.

“Hong Kong’s listing process is still perceived as slower and more rigid compared to the US,” Chang said. “Additionally, valuation multiples in Hong Kong are generally lower, especially in the tech and consumer sectors, which can deter companies from relisting unless compelled by US delisting risks.”

Hong Kong’s current price-to-earnings ratio stood at 12.97 times, similar to Shanghai’s main board at 12.78, though it was much lower than 25.6 times for the Nasdaq.

But Chang said the recent tension has led many consumer and fintech companies to prepare for Hong Kong listings.

“Start-up founders still value the prestige and depth of US capital markets, but [they] now weigh geopolitical risks more seriously,” Chang said.

The proposals from Tsang, of Deloitte China, to the policy unit advising Chief Executive Lee spelled out how Hong Kong could persuade US-listed mainland companies to list in Hong Kong.

“It is important for the stock exchange to make it easy and quick for the many US-listed companies that have a secondary listing status in Hong Kong to upgrade to become primary listings,” Tsang said.

“For the other US-listed mainland firms that have not yet listed in Hong Kong, the HKEX should promise to approve their listing application within 30 days, the same timeline for mainland-listed companies seeking a listing in the city.”

The government should also consider making funds available to help mainland companies to delist from the US and relist in Hong Kong, Tsang said.

“If the government took the lead, it would encourage other sovereign funds in the Middle East or Asia to invest in these companies,” he said. “It would help them list with a better valuation.”

Hui, the financial services and the treasury secretary, said the city has worked hard to expand its sources of investment.

“With regard to new markets and new investors, we will continue to open up new foreign capital sources,” Hui said, adding that HKEX has added 20 overseas exchanges to its list of recognised partners, meaning the listed companies on these bourses could easily apply to come to Hong Kong.

“In addition, the chief executive of Hong Kong has led Hong Kong business delegations to visit the Middle East and Asean countries a few times, which promotes Hong Kong’s securities market and fundraising platform to overseas enterprises, Hui said.

Cusson Leung, chief investment officer of Hong Kong-based financial firm KGI, said the city has explored different potential investor pools, including other parts of Asia and the Middle East.

“The attraction of foreign funding to the local stock market is not just relying on the promotion of the local capital market,” he said. “The quality and prospects of the listed companies are the most important factors to attract capital.”

Market sentiment also plays a role, according to Alex Yan, managing director and head of investment banking at GF Securities (Hong Kong).

“Negative perceptions of Chinese equities, fuelled by economic slowdown fears or tariff threats, can suppress valuations in the US,” Yan said. “As a result, many firms are turning to Hong Kong, where the Stock Connect programme and growing mainland investor base offer a compelling alternative.”