Twin-Track Trend

By Li Xiaoyang

On July 20， Ant Group， the fi ntech arm of Alibaba established in 2014， announced it would launch initial public offerings （IPOs） both on Hong Kong Stock Exchange and the Science and Technology Innovation Board of Shanghai Stock Exchange （SSE）， popularly known as STAR Market， consolidating the trend of dual listing among Chinese companies.

Four days earlier， chipmaker Semiconductor Manufacturing International Corp. （SMIC） got listed on STAR Market， following an earlier debut in Hong Kong. Electric vehicle maker Hozon Auto has also announced its plan to list on STAR Market in 2021.

Ant Group runs Alibabas digital payment and lending service platforms such as Alipay， Alipay Wallet， Yuebao and Ant Credit. The company， with an anticipated valuation of $200 billion， said it hopes to further its technological innovation and promote digital upgrading of Chinas service industry through the listings.

According to media reports， it is likely to raise $10-$20 billion on STAR Market， which will make it the biggest IPO on the A-share market. Wang Pengbo， an analyst at consultancy Analysys， told The Beijing News that Alipay holds over 53 percent of the mobile payment market share in China. Given its business expansion based on mobile payment and online fi nancial services， the high valuation is within expectations.

The trend shows the attraction and global competitiveness of STAR Market for tech companies in China， SSE said in a statement.

Triggering a trend

STAR Market started trading in July 2019 with relaxed rules to allow listing by tech fi rms in different phases of growth and with different equity structures. In March， SSE announced the board would be opened further to fi ntech enterprises and technological service providers. By July 22， 140 companies worth 2.8 trillion yuan （$400

billion） were trading on the board.

An increasing number of Chinese enterprises are seeking to list in both the mainland and Hong Kong as the stock markets lower their threshold and widen access. Alibaba was the fi rst to have a second listing in Hong Kong last year， followed by other Internet giants including NetEase and JD.com this year.

Yin Zhentao， an associate researcher with the Chinese Academy of Social Sciences， told The Beijing News the rapid development of Chinas capital market due to the introduction of a registration-based IPO system and the status of Hong Kong as an international financial center have made both the markets equally appealing. For registration-based IPOs， the companies have to simply register with the board， unlike the prevailing approval-based system in which they need approval from China Securities Regulatory Commission， a process that may take several months.