A+H Listing Momentum Accelerates as Market Eyes Potential Valuation Threshold Revisions

Since the start of 2025, a notable trend has emerged where A-share companies, led by giants like CATL, have been actively pursuing dual listings in Hong Kong. Market data indicates that over 40 firms have formally submitted listing applications to the Hong Kong Stock Exchange, while more than 30 others have publicly disclosed the commencement of relevant preparations.

Amid this surge, reports have surfaced suggesting that mainland regulators are considering the introduction of a minimum market capitalization requirement for A-share firms seeking Hong Kong listings. According to multiple brokerage sources, such a threshold is indeed under discussion, with proposals hinting at aligning the requirement with the standards used in the Global Depository Receipts (GDR) framework. If implemented, this would raise the minimum qualifying valuation from RMB 10 billion to RMB 20 billion.

Analysts suggest the potential adjustment is unlikely to significantly impact the current wave of listings. Most companies that have either filed or announced intentions to go public in Hong Kong are already established leaders in their respective sectors and command substantial market valuations.

In recent months, small-cap firms have begun accelerating their listing plans. Since the beginning of the year, ten A-share companies—including CATL, Jiangsu Hengrui, and Foshan Haitian Flavouring & Food Co—have proceeded with Hong Kong IPOs. Of these, five exceed RMB 100 billion in market cap, while only Xiamen Jihong Co Ltd falls below the RMB 10 billion threshold. Among the 44 firms that have submitted listing applications, all are valued above RMB 10 billion, including six with valuations over RMB 100 billion, twenty-six ranging from RMB 20 billion to RMB 100 billion, and twelve below RMB 20 billion.

Separately, more than 30 A-share companies have publicly announced their plans to list in Hong Kong. This includes several mid-sized companies with valuations between RMB 5 billion and RMB 8 billion, such as Shenzhen Reecam Tech, Cofco Healthcare, Hollyland Micro, StarRing Technology, Xinlei Shares, and Kutesmart. A review shows that the majority of listing announcements from these smaller firms were concentrated in July, with only two disclosures made in June. This pattern suggests that smaller-cap firms are accelerating their Hong Kong listing timelines, following the example set by industry giants.

The rationale behind this listing momentum is evident. With Hong Kong’s equity markets showing signs of recovery, this period offers a valuable fundraising window. Compared to the A-share market, post-listing financing in Hong Kong is more accessible. Furthermore, listing in Hong Kong provides a strategic entry point for companies aiming to globalize, enhancing visibility among international investors. However, whether the door remains open for small-cap firms remains uncertain and warrants continued observation.

Industry sources have indicated that regulators may draw reference from the GDR listing standards previously applied to mainland firms seeking overseas listings. These rules were tightened in 2023 following a wave of GDR issuances targeting European exchanges. Under interim measures issued by the Shanghai and Shenzhen Stock Exchanges, A-share companies applying to issue GDRs abroad—while listing corresponding A-shares domestically—must meet a minimum average market capitalization of RMB 20 billion, calculated over the 120 trading days preceding the application. This benchmark matches the requirement for overseas firms issuing reciprocal depository receipts in the A-share market.

One brokerage source noted that current discussions include a provision requiring A-share firms to maintain an average valuation of at least RMB 20 billion over the 120 trading days prior to application submission. Li Tianyi, General Manager of Guangzhou Ruizhi Capital, remarked that such a rule would be justified. He emphasized that it would help filter for fundamentally stronger companies, elevate the quality of Hong Kong’s listed firms, align with GDR benchmarks, and encourage firms to thoughtfully evaluate their readiness for international markets instead of reacting to short-term sentiment.

Yan Zhaojun, a strategist with Zhongtai International, echoed these sentiments, stating that imposing limitations on A-share firms seeking Hong Kong listings is appropriate. He argued that the Hong Kong market does not suffer from a shortage of IPO candidates, but rather a scarcity of high-quality issuers. According to Yan, attracting only well-qualified companies will reinforce the city’s capital formation role and support value creation in the secondary market.

In April 2024, the China Securities Regulatory Commission explicitly stated its support for mainland industry leaders pursuing Hong Kong listings—an implicit indication of scale-related expectations. The emphasis on “industry leaders” points to companies of significant size, suggesting that any formal threshold would merely codify this underlying standard.

Yan observed that among the over 40 A-share firms currently preparing to list in Hong Kong, some represent high-growth, innovation-driven sectors, while others hail from more traditional industries with slower expansion. He noted that motivations for listing may vary. While a few firms may be leveraging market optimism for opportunistic fundraising, the majority are likely focused on long-term international growth strategies.

He also highlighted that international investors in Hong Kong are increasingly drawn to sectors such as high technology, biotechnology, and artificial intelligence. Companies like CATL and Jiangsu Hengrui, for instance, have achieved notable valuation premiums on their H-shares compared to A-shares. In contrast, more traditional firms like Foshan Haitian Flavouring & Food Co have seen more muted performance post-listing.

In light of these trends, Yan suggested that additional filters—beyond market capitalization—could be considered, including sector-based or financial criteria. He argued that a more curated IPO pipeline would not only reduce excessive capital diversion but also bolster confidence in Hong Kong’s capital markets by ensuring the listings are of high quality.

Other market commentators added that implementing restrictions on smaller-cap firms would help maintain order during the current surge in listings and discourage herd behavior. One brokerage source noted that guiding A-share firms more rationally through this process will help preserve current market conditions and protect against unnecessary risks. As a market largely driven by institutional participation, Hong Kong may not be suitable for firms lacking strong fundamentals. It is worth noting that many companies voluntarily delist from the Hong Kong market each year.