This year has seen a complex and ever-changing economic landscape, marked by an array of reforms designed to deepen the capital markets. As a result, there has been a noticeable stabilization and rebound in investment activities. Among the most notable trends this year in the capital market dynamics is the increasing popularity of A-share companies launching their H-shares in Hong Kong, which has led to a proactive push for an "A+H" listing strategy. This movement not only provides new international opportunities for these enterprises but also plays a crucial role in enhancing their appeal in both domestic and foreign markets, thereby contributing to the establishment of a robust and high-quality capital market.

Ernst & Young (EY), one of the leading professional services firms, stands tall as a market leader in providing audit and advisory services that assist mainland companies looking to list in Hong Kong. Over the past three years, from July 2021 to September 2024, EY has facilitated the listing of 82 mainland enterprises in Hong Kong, claiming around 30% market share among the Big Four accounting firms. This long-standing experience coupled with a record of success underscores their position as a key player in this market space.

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The government's supportive policies have at last created an environment ripe for a series of "A+H" star enterprises to emerge. Since the beginning of the year, various policy measures have been introduced to support leading domestic companies to list on the Hong Kong stock exchange. In April, the China Securities Regulatory Commission rolled out five new initiatives to enhance capital market cooperation between the mainland and Hong Kong, with the goal of invigorating the Hong Kong market while also promoting synergistic development between the capital markets of the two regions. Additionally, in his third policy address on October 16, Hong Kong’s Chief Executive John Lee underscored ambitions to lure enterprises to list in Hong Kong, leverage the mutual market interconnections with mainland China, attract international companies, and facilitate significant IPOs in the near future.

Further emphasizing this dedication, on November 16 during the third International Financial Leaders Investment Summit, the significance of a deeper bilateral opening of capital markets was discussed. There’s a clear intent to streamline cross-border financing processes through enhancing foreign capital channels, improving the efficiency of offshore listings, and expanding the mutual connection programs between domestic and foreign markets.

The supportive policies have resulted in a surge in "A+H" listings by 2024. As of now, over 150 "A+H" stocks are trading on the Hong Kong market. Several companies, including SF Holding, Midea Group, and Longpan Technology, have successfully listed their H-shares this year. An upward trend continues as more A-share companies pursue plans to list in Hong Kong, significantly increasing the number of companies filing applications with the Hong Kong Stock Exchange. In September, Midea Group alone netted over HKD 30 billion by going public at an issue price of HKD 54.8 per share, which soared to HKD 67.7 by November 22 – a fantastic example of the caliber and potential of A-share companies making their secondary listings in Hong Kong. This listing marked the largest new capital raising in Asia for the first three quarters of 2024 and the second largest globally, showcasing the feasibility and merit of such interdisciplinary market strategies.

In the context of a global economic shift, 2023 witnessed a renewed effort from Chinese companies to embrace globalization. This new wave not just assimilates traditional global supply chains but promises to reconstruct the value chains entirely, leaning towards a more optimized global operation strategy for firms with international perspectives. The "A+H" dual listing approach culminates in critical strategic significance as it broadens investors’ bases and funding channels while boosting the research coverage from international investment banks and institutions. By harnessing a capital platform in Hong Kong, these companies can more efficiently attract and use cross-border funds to support their needs for market expansion and overseas mergers and acquisitions.

As the recognized financial epicenter of Asia, Hong Kong wields a unique appeal that entices high-quality foreign investments. The stock market operates with an advantageous institutional architecture that combines flexibility with international standards. Hong Kong's legal and capital frameworks are aligned with global practices, making it particularly attractive to international institutional investors who value transparency and regulatory compliance. This is particularly beneficial for prospective H-share companies which often face rigorous demands from global investors who prioritize firms with a solid competitive edge and sustainable growth, especially in high-tech sectors.

Moreover, the continual enhancements in policies such as QDII and the Shanghai-Hong Kong Stock Connect have opened up more channels for mainland capital to invest in the H-shares, facilitating a stronger cross-border investment framework. The Chinese government’s persistent efforts to reform and open the financial markets have fostered a favorable environment, including easing restrictions for foreign capital entry and optimizing the management of cross-border fund flows, which in turn is driving up foreign investments in the Hong Kong market. Together, these dynamics create an essential pipeline for premium overseas funds to flow into mainland enterprises, thus solidifying their foothold in the global market.

One of the promising features of the Hong Kong stock exchange is the high degree of assurance regarding IPO approvals. Focused heavily on the principles of information disclosure, the IPO timelines are clearly defined. On October 18, the Hong Kong Exchanges and Clearing (HKEX) and the Securities and Futures Commission (SFC) revealed an optimized process for listing applications. According to the new timeline, applicants can expect regulatory feedback within a timeframe of 40 working days, while responses to regulatory concerns can typically be handled in about 60 days - a process that provides businesses the opportunity to strategize their IPO plans with greater certainty.

A particularly noteworthy aspect of the new expedited process is tailored for "qualified A-share companies" with a market valuation exceeding a certain threshold; if such a company submits a compliant application, it may only expect one round of regulatory feedback, and the overall assessment will be completed in no more than 30 working days. This is significant since A-share listed companies already maintain compliance with stringent information disclosure and regulatory requirements, making their approval path smoother compared to entirely new listings.

With investor sentiment on the rise and expectations for a reduction in US interest rates growing, the Hong Kong stock market stands at the cusp of renewed capital influx. As the historically observed patterns suggest, periods of lowering interest rates by the Federal Reserve often lead global investors to seek more attractive investment vehicles. The optimistic economic outlook for China casts Hong Kong in a favorable light, making it an enticing market for global funds inclined towards investment opportunities.

Looking ahead, the combination of supportive governmental policies, the flexible financing options provided by the Hong Kong capital market, and growing investor confidence collectively herald a significant window of opportunity for A-share companies to embark on their Hong Kong listing journeys. This development is pivotal not only in the context of enhancing individual company profiles but also for the broader strategy of achieving globalization and optimizing resource allocation towards an internationally competitive horizon. However, as A-share enterprises chart their path towards listing in Hong Kong, it is crucial that they conduct thorough assessments of their growth strategies, financial health, and adaptability to the regulatory landscape to effectively navigate this transition.