By Joanne Chiu 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 28, 2020).

Two of China's most valuable U.S.-listed companies are pushing ahead with multibillion-dollar share sales in Hong Kong, amid growing pressure from U.S. lawmakers for greater financial scrutiny of Chinese companies.

The listing plans of NetEase Inc., an online-games company, and JD.com Inc., the operator of an e-commerce website, will be reviewed on Thursday by the listing committee of Hong Kong's stock exchange, people familiar with the situation told The Wall Street Journal.

If it secures the listing approval, NetEase would begin taking orders from investors early next week, aiming to raise between $2 billion and $3 billion from the secondary listing ahead of a trading debut on June 11, a person familiar with the situation said.

JD.com plans to raise around $2.5 billion to $3 billion and start trading in Hong Kong on June 18, the date of its annual sales event, another person familiar with the situation said. It will kick off the stock sale in Hong Kong during the week of June 8.

Both fundraisings have been increased in size, compared with earlier plans, as the two companies' U.S.-traded securities have risen this year.

The final sizes will depend on market conditions and the prices of their American depositary receipts as the secondary listing nears, the people said.

Bigger peer Alibaba Group Holding Ltd. raised roughly $13 billion through a stock sale in the city last November.

NetEase joined the Nasdaq in 2010. Its American depositary receipts have risen nearly 26% this year, giving it a market capitalization of nearly $50 billion as of Wednesday.

The equivalent securities for JD.com, which went public in the U.S. in 2014, have risen 49% this year, giving it a market value of around $77 billion.

The listings come at a sensitive time for Chinese companies -- and for Hong Kong. Rising U.S.-China tensions and recent admissions of accounting fraud at Luckin Coffee Inc., a Chinese coffee chain that only went public last year, have prompted heightened scrutiny of U.S.-listed Chinese companies.

Legislation that has been passed by the Senate -- and has been introduced in the House -- would kick Chinese companies off U.S. stock exchanges unless their audits are inspected by U.S. regulators.

Meanwhile, Beijing's move to impose new national-security laws on Hong Kong has raised concerns over the city's status as a major financial hub.

On Wednesday, Secretary of State Mike Pompeo said the State Department had determined Hong Kong no longer has a high degree of autonomy from China.

Hong Kong's stock exchange has changed its rules to court more listings by tech and biotechnology groups, aiming to rejuvenate a market dominated by less dynamic sectors such as banking and property.

Separately, on Wednesday the exchange's parent company, Hong Kong Exchanges and Clearing, struck a 10-year licensing deal that will allow it to offer futures and options based on 37 MSCI Inc. stock indexes covering Asian and emerging markets.

HKEX Chief Executive Charles Li said the deal, which effectively sees the exchange take the place of regional rival Singapore Exchange Ltd. in offering these MSCI-based products, was the next step in the group's international strategy, and said he was confident in Hong Kong as a financial center. "I have every confidence that we're going to come out on the other side, more successful," after recent political and social turmoil, he said.

Shares in Singapore Exchange tumbled on Wednesday and fell further on Thursday morning, taking their two-day decline to more than 16%.

Robin Li, founder of Chinese search-engine operator Baidu Inc., this month told the state-backed China Daily newspaper the company paid close attention to heightened scrutiny of Chinese companies and was constantly exploring options including a secondary listing in Hong Kong or elsewhere.

Write to Joanne Chiu at joanne.chiu@wsj.com

 

(END) Dow Jones Newswires

May 28, 2020 02:47 ET (06:47 GMT)

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