A tale of two markets for Chinese groups

While Duality Biologics defied turbulent markets to float on the Hong Kong stock exchange and double its share price on Tuesday, rumours are swirling again that Chinese companies could be delisted from US exchanges. Trouble has been brewing since 2020, with passage of the US Holding Foreign Companies Accountable Act, which focused on companies audited in foreign jurisdictions inaccessible to the Public Company Accounting Oversight Board. In 2022 the US SEC published a list of non-compliant companies, including BeiGene, Zai Lab and Hutchmed. Now, US tariffs and Chinese counter-tariffs have thrown a new spotlight onto this issue. Still, Evercore ISI’s Umer Raffat dismissed noises about potential US delistings of Chinese names as a negotiating tactic. He noted that a particular focus had fallen on Legend Biotech, but added that the company switched its primary auditors from Ernst & Young China to Ernst & Young US – a move also made by BeiGene. Many China-originated biotechs have been highlighting their global operations, with BeiGene even announcing a name change, to BeOne Medicines. Any US crackdown could benefit the Hong Kong market, where Duality just raised $213m in an oversubscribed offering, with shares issued at HK$94.60 apiece before closing at HK$204.