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Hong Kong listings for Weibo, SenseTime, NetEase’s music app seen as test case for China’s new cybersecurity rules

  • Three Chinese tech companies are poised to float their shares on the Hong Kong stock exchange this month
  • Their planned listings come after Beijing proposed new rules requiring cybersecurity reviews for certain offshore IPOs, including in Hong Kong

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Weibo CEO Charles Chao (centre) celebrates moments after Weibo began trading on the Nasdaq stock exchange on April 17, 2014 in New York. The company is seeking a secondary listing in Hong Kong this month. Photo: AFP
Xinmei ShenandGeorgina Lee

The upcoming Hong Kong listings of three Chinese tech firms are being viewed as a test case for new mainland regulations that require certain initial public offering applicants to pass a cybersecurity review before going public in the city, with the outcome providing some clarity for Chinese companies mulling a flotation on one of Asia’s largest stock exchanges.

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Microblogging platform Weibo, often dubbed China’s Twitter, is hoping to raise up to US$547.3 million in a secondary listing in Hong Kong expected on December 8, while NetEase’s music streaming service Cloud Village has priced its IPO last week that would help it raise US$421 million ahead of its shares debut on Thursday. Meanwhile, artificial intelligence company SenseTime has received approval from the Hong Kong stock exchange to proceed with a US$2 billion offering later this month.

These deals come amid Beijing’s intensified scrutiny of tech companies and their data security practices, in particular the transfer of data outside mainland China, which the government deems a matter of national security.

In July, soon after Chinese ride-hailing giant Didi Chuxing went public in New York, the Cyberspace Administration of China (CAC) launched a cybersecurity review into the company and proposed a mandate for all Chinese firms with more than a million users to get approval before listing in foreign markets.

While some people had assumed that IPOs in Hong Kong would be exempt from that requirement, draft rules released by the CAC last month clarified that listings in the special administrative region would also need to go through a cybersecurity review if they “affect or may affect national security”.
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The regulations, which have yet to be officially enacted, have created ambiguities for companies looking to float in Hong Kong.

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