FAST NEWS: Property Platform KE Holdings to Make Second Primary Listing in Hong Kong

The latest: Chinese real estate platform KE Holdings Inc. (BEKE.US; 2423.HK) announced Thursday it will make a second primary listing for its Class A ordinary shares on the Hong Kong Stock Exchange by way of introduction, with trading set to start May 11. At the same time, it said it would continue to maintain its older primary listing on the New York Stock Exchange.

Looking up: The company’s move comes as the U.S. securities regulator is requiring that U.S.-listed Chinese companies share their audit records. It is threatening to forcibly delist those that fail to comply, even though they are banned from doing so by Chinese law. Accordingly, KE Holdings’ choice to dual-list means that both capital markets will be primary venues for its shares, meaning its stock can continue to trade in Hong Kong even if it is later delisted in the U.S.

Take Note: As KE Holdings is being listed by way of introduction, no new shares will be issued and no new funds will be raised to assist in the company’s business development.

Digging Deeper: The U.S. passed the Holding Foreign Companies Accountable Act (HFCAA) in 2020, empowering the Securities and Exchange Commission (SEC) to suspend or even delist foreign companies that do not meet U.S. disclosure requirements. That has created an uproar for roughly 270 U.S.-listed Chinese companies, which are barred by Chinese law from sharing their audit records as demanded by the U.S. securities regulator. On April 21, KE Holdings was placed on the SEC’s list of companies that were out of compliance with the HFCAA, and the company responded that it was actively seeking possible solutions to protect shareholder interests. Its decision to dual-list in Hong Kong is a likely response to the potential U.S. delisting risk.

Market Reaction: Prior to the announcement, KE Holdings shares were up 0.42% at $14.47 in Wednesday after-hours trade in New York. They have lost 73.4% of their value from their 52-week high in early June last year.

Translation by Jony Ho

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