Research On The Motivation And Effect Of Secondary Listing Of Chinese Concept Stocks In Hong Kong

The Luckin scandal of 2020 caused a crisis of confidence in China Concept stocks and had significant economic and social consequences.International short sellers exploited information asymmetry and financial problems of some Chinese companies,frequently initiating short selling of China Concept stocks.In May 2020,the US Foreign Company Accountability Act was introduced,leading to stricter overseas capital market supervision.This worsened the US market environment for China Concept stocks and caused related companies’ share prices to drop significantly.Meanwhile,China’s domestic capital market continuously improved its listing rules,with both A-shares and the Hong Kong Stock Exchange conducting policy reforms conducive to the return of Chinese concept stocks.As a result,some Chinese companies listed in the US such as Alibaba and Huazhu Group chose to undergo secondary listing in Hong Kong,becoming a capital market hotspot.The outbreak of the COVID-19 pandemic has brought a massive impact to various industries,especially the hotel industry.Under the epidemic context,restrictions on personnel movement have presented enormous challenges,causing demand to drop sharply and directly leading to a significant revenue decline for hotel companies like Huazhu Group,as well as increasing operational risks.This study uses Huazhu Group,a leading hotel industry enterprise,as an example to analyze its motivation,path,and effect of their secondary listing in Hong Kong.The study discovered that the external reasons behind Huazhu Group’s secondary listing in Hong Kong were the middle kingdom concept stock crisis under strict overseas supervision,the attractiveness of Hong Kong’s policies reformation,and lower US stock malicious short selling risks.The main internal motivations were increased business risk during the pandemic,contrarian expansion strategy and the need of high R&D investment funds.Compared to A-shares,the path for Chinese concept stocks to return to Hong Kong was simpler,faster,with lower cost of information disclosure,and allowed for easy conversion of holdings between Chinese Hong Kong and US Stocks.It provided Huazhu Group with a better path to avoid being delisted.Regarding its impact,this study discovered that Huazhu Group’s secondary listing in Hong Kong had good market performance.It effectively raised the company’s stock market liquidity and dispersed the delisting risks.In terms of operational effectiveness,the secondary listing allowed Huazhu Group to expand its capital base,improving the company’s debt repayment capacity,assisting business recovery and development,diversifying financial channels,supporting contrarian expansion and optimizing R&D investment costs.The success of Huazhu Group’s secondary listing can be attributed to choosing a path that suits its needs,raising funds reasonably,supporting strategic development,and returning closer to the local market to enhance reputation.Finally,this study summarizes the lessons learned from Huazhu Group’s secondary listing in Hong Kong and provides inspiration for other China Concept stocks’ companies from both theoretical and practical perspectives.