Since the significant improvement in liquidity in the Hong Kong stock market since 2025,$NetEase (NTES.US)$the listing status of Chinese概念股 is undergoing changes.
On March 2,$NTES-S (09999.HK)$NetEase announced that due to its trading volume on the Hong Kong Stock Exchange exceeding 55% of its global total trading volume during the fiscal year 2025, it triggered the 'shift in trading focus' clause of the Hong Kong Stock Exchange. The company must fully comply with the relevant Hong Kong listing rules applicable to dual-primary listed issuers, and exemptions related to secondary listings will no longer apply.
This may appear to be a passive change in listing status triggered by trading volume, but it is in fact an important milestone in the development history of Chinese概念股. It also sends various signals regarding the ecosystem of the Hong Kong stock market and the future direction of Chinese概念股. Professional analysts have pointed out that, under the backdrop of continuous optimization of policy environments and rising market attention, the Hong Kong stock market is gradually highlighting its key position as an important strategic base for receiving the return of Chinese概念股 and assisting in reshaping the global capital pricing system.
NetEase is about to bid farewell to the 'S' era.
According to NetEase's announcement, the Hong Kong Stock Exchange has granted NetEase a 12-month grace period, which will expire on February 27, 2027. Upon expiration, NetEase will be regarded as having dual-primary listing status, meaning the Hong Kong Stock Exchange will remove the 'S' designation from NetEase's secondary listing.
In this regard, NetEase stated that it is evaluating the impact of converting to dual-primary listing. To date, the company believes that the exchange notification and transition grace period will not have a significant impact on Hong Kong shareholders and investors.
According to LiveReport big data forecasts, if NetEase officially completes the conversion by the end of February 2027, it is expected to be included in the Shanghai-Hong Kong Stock Connect in March 2027. If NetEase completes the conversion of its listing status ahead of schedule, it may be included in the Stock Connect earlier. This means that mainland investors may have the opportunity to purchase NetEase through the Stock Connect at least in the first quarter of next year.
Previously$Alibaba (BABA.US)$After completing the conversion to dual primary listing, Alibaba was successfully included in the Stock Connect program and attracted a significant amount of southbound capital allocation. According to Wind data, as of March 3, southbound funds held approximately 2.252 billion shares of Alibaba through the Stock Connect program, accounting for 11.79% of the total shares, with a market value of HKD 321.856 billion.
Liu Yan, Chairman of Anjue Asset Management, told reporters that NetEase's triggering of mandatory dual primary listing due to over 55% of its trading volume occurring on the Hong Kong Stock Exchange (HKEX) marks the first practical implementation of the relevant listing rules by HKEX. This signals a profound shift in the capital landscape for U.S.-listed Chinese companies (China Concepts Stocks), reflecting that the trading focus and investor base of high-quality China Concepts Stocks are substantively shifting from U.S. markets to the Hong Kong market. The pricing power of mainland and Asian funds is continuously increasing, further solidifying the Hong Kong market's position as the core offshore market for China Concepts Stocks.
At the same time, 'dual primary listing is transitioning from a passive risk-avoidance choice for enterprises to a mainstream path for China Concepts Stocks to optimize their capital structure and diversify market risks. The institutional design of HKEX effectively guides the alignment between listing status and trading focus.' Liu Yan also stated that this event indicates that China Concepts Stocks are entering a new phase characterized by dual-regulation and compliance in two jurisdictions. It imposes higher requirements on corporate governance, information disclosure, and cross-market management, reflecting that the global capital market’s strategic logic, regulatory rules, and valuation systems for China Concepts Stocks are undergoing accelerated restructuring.
The prerequisite for NetEase triggering the 'shift in trading focus' clause is that 55% or more of the company’s total global trading volume occurs on HKEX. Hu Zhenyi, Chief Investment Officer of Honghan Investment, pointed out in an interview with reporters that the continued migration of China Concepts Stocks’ trading focus to the Hong Kong market reflects the growing valuation capacity and liquidity advantages of the Hong Kong market for platform-based enterprises. In 2025, the Hong Kong market ranked first globally in IPO fundraising, with record net inflows of southbound capital, significantly improving the liquidity of the Hong Kong market and enhancing its capacity to accommodate the return of China Concepts Stocks.
Expected to attract more China Concepts Stocks to return
Secondary listing is typically regarded as a 'secondary board' outside a company’s primary listing venue. Following the reform of HKEX’s listing system, Alibaba pioneered the secondary listing trend for China Concepts Stocks in Hong Kong in 2019. Subsequently, in 2024, Alibaba proactively applied to change its secondary listing status to dual primary listing to expand its investor base and gain inclusion in the Stock Connect program.
Dual primary listing means that a company holds equal listing status on two stock exchanges, must comply with the listing rules of each exchange independently, and the shares listed on the two exchanges cannot be cross-traded. This model ensures that a delisting action in one market does not directly affect the listing status in the other market, while potentially qualifying the company for inclusion in the Stock Connect program.
NetEase’s triggering of HKEX’s 'shift in trading focus' clause is of landmark significance, possibly representing the first case where a company was 'passively' converted to dual primary listing status due to trading volume thresholds. According to statistics compiled by Securities Times based on Wind data, as of now, several China Concepts Stocks remain in secondary listing status on the Hong Kong market, including $BIDU-SW (09888.HK)$ 、 $JD-SW (09618.HK)$ 、 $TME-SW (01698.HK)$ 、 $WB-SW (09898.HK)$ 、 $HWORLD-S (01179.HK)$ 、 $NIO-SW (09866.HK)$ 、 $TRIP.COM-S (09961.HK)$ 、 $NEW ORIENTAL-S (09901.HK)$ 、 $GDS-SW (09698.HK)$ 、 $AUTOHOME-S (02518.HK)$ , etc.
The aforementioned enterprises are potential participants in future changes to their listing status. Wen Tian Na, CEO of Grand Fortune Capital International, told reporters that the transition of Chinese concept stocks from secondary listings to dual primary listings will bring the following three opportunities:
1. Enhanced liquidity and valuation. Previously, Chinese concept stocks with secondary listings found it difficult to enter Stock Connect, restricting southbound fund participation. After transitioning to dual primary listings, mainland institutional and individual investors will be able to purchase shares more conveniently, which is expected to significantly increase average daily trading volume, driving valuation recovery and repricing.
2. More flexible financing and capital operations. Under dual primary listings, issuing new shares, placements, or buybacks can proceed more smoothly, attracting more international and mainland institutional investors and reducing reliance on a single market.
3. Strengthened investor confidence and brand enhancement. The trading focus has effectively 'returned home,' fostering a stronger sense of belonging among mainland users and partners, and facilitating possible further capital actions in the future.
However, after Chinese concept stocks transition to dual primary listings, they will face higher compliance requirements. Yuan Mei, Director of Investment Research at Frost & Sullivan Jie Li (Shenzhen) Cloud Technology Co., Ltd., pointed out in an interview that after Chinese concept stocks switch to the Hong Kong Stock Exchange, companies must comply with relevant Hong Kong listing rules applicable to dual primary listing issuers. For instance, prior to converting to dual primary listing status, Alibaba only disclosed share repurchase activities in aggregate within quarterly financial reports. After converting to dual primary listing status, the company must submit a 'next-day disclosure report' before the market opens on the next trading day for every repurchase action, greatly enhancing transparency and allowing the market to track repurchase activities in real time and with precision.
Liu Yan believes that NetEase’s landmark case fully demonstrates that the Hong Kong stock market has established a mature and comprehensive support system in terms of listing systems, trading liquidity, and the ability to absorb continuous inflows of southbound funds. It now has the market foundation and institutional guarantees to handle the return of high-quality Chinese concept stocks in bulk. This event also provides clear and practical references for other Chinese concept stocks listed in the US, enabling related companies to mitigate single-market risks through dual-listing, expand financing and capital operation space, and ultimately achieve an upgrade from relying solely on US stocks to a dual-driven capital structure involving both US and Hong Kong stocks.
Continuous optimization of the Hong Kong stock market ecosystem
In recent years, the Hong Kong Stock Exchange has optimized pricing allocation mechanisms, lowered A+H thresholds, and introduced inclusive policies under Chapter 18A and 18C for unprofitable and hard-tech enterprises. Coupled with mainland policies supporting quality enterprises going public in Hong Kong, the ecosystem of the Hong Kong stock market has continuously improved.
To accelerate the pace of listing system reforms and attract more new economy enterprises to list in Hong Kong, the Hong Kong Special Administrative Region Government's fiscal budget for 2026-2027 proposed several optimization measures for the securities market. The main content includes consulting the market in the first quarter on revising the listing requirements for companies with weighted voting rights, providing greater flexibility for biotech and specialized technology companies applying for listings, among others.
In recent years, leading companies in sectors such as consumer goods, technology, hard tech, and biomedicine have increasingly chosen to go public in Hong Kong. The Hong Kong stock market is transitioning from being traditionally dominated by financials and real estate to a focus on 'technology and new economy.' Wen Tian Na stated that Hong Kong's stock market is poised to further solidify its position as the 'preferred international listing venue for new economy enterprises,' particularly in the fields of hard technology and consumer upgrading. This not only enhances Hong Kong’s competitiveness as an international financial center but also provides Mainland China’s innovative enterprises with a more efficient global financing channel, fostering a virtuous cycle between the Mainland, Hong Kong, and the world.
NetEase’s conversion of its listing status is a vivid continuation of this broader trend at the level of established giants. Hu Zhen Yi believes that NetEase triggering a 'mandatory conversion' is both a unique case and a concentrated reflection of the attractiveness and regulatory strength of the Hong Kong stock market. For the market, this trend will further consolidate Hong Kong’s position as the core capital market for China’s new economy, promoting the return of U.S.-listed Chinese companies and the ongoing upgrade of Hong Kong's stock market ecosystem. Against the backdrop of global volatility, optimizing market systems in Hong Kong will help attract global capital and enhance the appeal of Renminbi-denominated assets.
Editor/Rice
