The Latest: Logistics company ZTO Express (Cayman) Inc. (ZTO.US; 2057.HK) said its application to upgrade its Hong Kong listing from “secondary” to “primary” status has been approved and is expected to take effect on May 1 next year, according to a statement on Friday. It previously announced the plan to upgrade its listing last month.

Looking Up: The upgrade would make ZTO’s Hong Kong-listed shares eligible for inclusion in a program connecting the Hong Kong stock market with its counterparts in Shanghai and Shenzhen, allowing Chinese mainland-based investors to trade in its stock. 

Take Note: Requirements for the primary status ZTO is seeking are more stringent than its current secondary status. That means the company is likely to incur more expenses to maintain the new status going forward than it was previously paying.

Digging Deeper: ZTO is one of the most profitable companies in China’s ultra-competitive parcel delivery business. It was previously the only major player with a sole listing in New York, compared with peers that were listed in Hong Kong, Shanghai or Shenzhen. But it made a second listing in Hong Kong in 2020, following a trend for New York-listed Chinese companies to seek such second listings as insurance against potentially being forced to de-list from the U.S. Many of those companies initially listed in Hong Kong with secondary status, but are now upgrading to primary status to give them better access to mainland Chinese investors.

Market Reaction: ZTO shares fell about 1% in Friday trading in New York after the announcement. U.S. markets were closed on Monday for the Christmas holiday.

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Reporting by Doug Young

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