China opens up access to dual-class shares listed in Hong Kong

Photographer: Justin Chin/Bloomberg

China will allow onshore investors to buy dual-class shares traded in Hong Kong for the first time, giving them access to some of the world’s hottest startups such as Xiaomi Corp and Meituan Dianping.

The country’s stock exchanges on Friday revised rules to bring stocks with different classes of voting rights into the trading links between the mainland and the former British colony. The rules will be effective Oct. 28, according to announcements on the social media accounts of the Shanghai and Shenzhen stock exchanges.

The announcement elevates the importance of the Stock Connect program at a turbulent time as protests in Hong Kong enter their 20th week. The Hong Kong Exchanges & Clearings Ltd. this month dropped its 29.6 billion-pound ($38.1 billion) unsolicited takeover bid for the London Stock Exchange Group Plc which cited existing partnership with the Shanghai bourse as its “preferred and direct channel” to access China.

Chinese authorities have been trying to find ways to keep the country’s tech companies at home, and last year worked on plans for depository receipts, which were designed to let dual-class shares, not permitted on its major exchanges, trade onshore. A new trading venue, known as the STAR market, allows the structure, and has recently approved the first company with unequal voting rights to list.

HKEX’s years-long push for weighted-voting rights, which are often used by tech founders to keep control of their companies even after going public, was in part premised on China-based technology firms choosing Hong Kong over the U.S. because it’s easier for China’s domestic investors to trade via the stock connect. Alibaba, which uses the structure and is listed in New York, is said to mull a Hong Kong listing, which could raise as much as $20 billion.

The bourse operator generated about 5% of its revenue from the links with stock exchanges in Shanghai and Shenzhen, according to its latest annual statement.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.