NetEase seeks to have a secondary listing for its shares in the Hong Kong stock market by next week. Chinese companies are also under scrutiny in the New York Stock exchange, while China and US trade tensions worsen.
Chinese gaming company NetEase announced that it would issue about 171 million USD shares at a maximum price of 126 HKD each. The discounted price would be the closing value in the New York Stock Exchange where it has been traded since 2000.
The move was said to be in response to the growing tensions between China and the US. The expected proceeds of the transaction could reach 2.8 million USD if they are sold at the top of the range. The final price, however, would be finalized by Friday. There was no showing of the expected minimum price. The trade of NetEase stocks in Hong Kong would commence on June 11.
NetEase began as a Chinese internet portal during the late 90s. Subsequently, it entered the online games market by 2001. Analytics company App Annie considers NetEase as the largest mobile company globally and is more significant than Tencent. The company, on the other hand, identified its most reliable products as Identity V, Rules of Survival, and Knives Out, among others.
The company further explained that the funds of the trade would be used to expand its online game offerings globally, particularly in the US, Europe, Japan, and Southeast Asia. The company also manifested that it would use the proceeds in the continual innovation of its products and services as well.
The money raised would also be generated while the US and China relations are worsening. The relationship was already recognized as a fragile agreement. However, the latest conflict regarding China's National Security Law on Hong Kong poses a threat to the technology sector.
NetEase would then be raising billions in Hong Kong. The said move was perceived to be a similar strategy for Chinese companies that are seeking IPOs in Wall Street and are currently facing scrutiny.
Last month, Nasdaq raised a rule wherein Chinese companies would find it more challenging to go public in the US stock exchange. The said move was a response to the Luckin Coffee scandal. Due to the issue, the US Senate unanimously passed a bill that would limit companies from entering US listing if they fail to open their books.
NetEase also cited that the US regulatory environment and the potential passage of the bill raise several risk factors for Chinese companies. Hence, the filings to the Hong Kong stock exchange was deemed a safer alternative.
