NetEase Set for Biggest Hong Kong IPO This Year; JD to Follow

Even as the tensions intensified lately in Hong Kong, its bourse is preparing for its two largest floats of the year.
Anthony RussoMay 28,2020,17:25

NetEase (Nasdaq: NTES) is getting set to raise up to $2.5 billion in Hong Kong next month, which is slated to be the biggest stock offering in the city this year.

The Chinese gaming giant listing plans were approved by the Hong Kong Stock Exchange's listing committee on Thursday and will price its offering on Friday and debut in the city on June 11. The secondary-listing would come before the e-commerce giant, (Nasdaq: JD) which could raise roughly $3 billion in its debut on June 18, according to Nikkei Asian Review. The share sales would be the first ones to exceed Alibaba Group Holding Ltd.’s (NYSE: BABA; HKEX 9988) debut in November 2019, raising $13 million in its IPO.

The news comes as trade tensions have hit another level as today the National People's Congress (NPC) gave it's Standing Committee the approval to enact a new national security law that would tighten Beijing’s control in Hong Kong. 

President Trump who hasn’t been too pleased with China on its Covid-19 handlings has threatened to take action and has said "If it happens we'll address that issue very strongly." The U.S. Secretary of State Mike Pompeo declared Hong Kong no longer autonomous from China on Wednesday, which could be devastating for the global financial hub.

Diana Choyleva, a chief economist at Enodo Economics told MarketWatch if the U.S. were to end all privileges under the United-States Hong Kong Policy Act of 1992 “The Hong Kong economy would basically be gone.” 

Earlier this month, the U.S. Senate passed a bill to make things more challenging for Chinese companies to list on its exchanges. In addition, around 800 Chinese firms are likely to delist from U.S. bourses, according to Bloomberg. 

"Despite the uncertainty out there, these offerings should be well bid. At least, the preliminary discussions with investors give us confidence," a person familiar with the NetEase and JD deals said, according to Nikkei.

Chinese search engine giant Baidu, Inc. (Nasdaq: BIDU) is considering delisting from Nasdaq because it feels undervalued in New York, as reported by Reuters. Baidu has held talks with Hong Kong regarding a possible listing.