Recently, news has been reported that mainland regulatory authorities are considering setting minimum market value standards for A-share companies listed in Hong Kong. Several securities firms revealed that relevant departments are indeed discussing plans to increase the threshold for market value entry. The new standard may refer to the global depositary receipt policy and increase the market value requirement from the current 10 billion yuan to 20 billion yuan. This adjustment is intended to ensure that companies listed in Hong Kong have sufficient scale and strength and maintain the overall quality of the Hong Kong stock market.
The regulatory authorities are considering raising the market value threshold, mainly referring to the relevant standards for issuing GDRs in the mainland. In the early days, a large number of mainland companies chose to list on the European exchanges, and then regulators tightened the listing requirements for GDR in 2023. According to the relevant measures issued by the Shenzhen Stock Exchange and the Shanghai Stock Exchange, when domestic listed companies issue GDRs overseas, the average market value of A-shares in the 120 trading days before the application date shall not be less than RMB 20 billion. This standard is consistent with the market value requirements for overseas listed companies to issue Internet depositary receipts on the A-share listing.
The new market value threshold setting reflects the regulatory authorities’ attention to the quality of the Hong Kong stock market. Screening high-quality companies with stronger strength to participate in the Hong Kong stock market will help improve the corporate structure of the Hong Kong stock sector. Such an arrangement can enhance the attractiveness of the Hong Kong stock market to global investors, and at the same time form a unified approach with the market value standards set by the previous GDR policy. Companies also need to evaluate more carefully whether they are suitable for listing in Hong Kong to avoid blindly following the trend.
