FAST NEWS: Zai Lab to Elevate Hong Kong Listing to Primary Status

The latest: Zai Lab Ltd. (9688.HK,ZLAB.US), a biotech company with a primary listing in New York and secondary listing in Hong Kong, announced on Tuesday that it has received approval to elevate its Hong Kong listing to primary status. It said it expects the conversion to become effective on June 27.

Looking up: The company believes the upgrade will help attract more investors to its Hong Kong-listed stock, thereby expanding its investor base and trading volume.

Take Note: Unlike secondary listings, dual-primary listings are subject to higher regulatory requirements and do not enjoy the same leniency and exemptions from the Hong Kong Stock Exchange.

Digging Deeper: The U.S. passed the Holding Foreign Companies Accountable Act (HFCAA) in 2020, empowering the U.S. securities regulator to suspend or even delist foreign companies that do not meet U.S. disclosure requirements. Since then, Zai Lab’s U.S.-listed shares were identified by the regulator in March for potential delisting, after which the company chose to change its Hong Kong listing status to primary from its previous secondary status. That means both capital markets will become the company’s primary listing venues, and that the company’s Hong Kong listing status would not be affected even if its shares were later delisted in the U.S.

Market Reaction: Zai Lab’s U.S. shares fell 2.7% to $29.10 on Tuesday. Its Hong Kong shares plunged 6.6% to HK$23.25 at the midday break on Wednesday, nearing a 52-week low.

Translation by Jony Ho

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