Equity: Stock Connect bourses agree on dual-class shares
The Hong Kong Stock Exchange and its counterparts in Shanghai and Shenzhen will include companies with dual-class shares on the southbound trading of Stock Connect, after reaching a deal.
Stock Connect’s bourses are working to put together a set of rules governing dual-class share trading, which they expect to implement by mid 2019, according to an announcement from the Hong Kong Stock Exchange in early December 2018.
“The Shanghai Stock Exchange, Shenzhen Stock Exchange and [HKEx] jointly announce that they have reached a consensus on the detailed arrangement for the inclusion of companies with weighted voting rights in southbound trading of Stock Connect,” says the announcement. “The three exchanges will promptly work on formulating relevant rules, and will announce them to the market after completing the necessary procedures.”
Charles Li, HKEx
The Hong Kong exchange, under Charles Li, only amended its regulations to allow the listing of shares with weighted voting rights (WVRs) in April 2018.
WVRs enable control of a company by a small number of shareholders. The structure is popular with tech firms, where the founders often want to retain control over their long-term vision rather than be tied to short-term concerns.
The introduction of WVRs followed a four-year effort by Hong Kong to become a listing hub for Chinese new economy companies, which was sparked by the city’s loss of Alibaba Group Holding’s $25 billion IPO to New York in 2014.