Hong Kong exchange welcomes New York defectors keen to list

Hong Kong's capital market is set to embrace a new breed of Chinese issuers that have left the Nasdaq and New York Stock Exchange for a listing in the city, as a more favourable valuation of shares and the depth of liquidity have lured them back home.

"There are more take-private activities by [the mainland] companies previously listed in the US markets since they got disillusioned and saw less benefit from a US listing," Mark Hyde, Clifford Chance's head of finance in Asia Pacific, said in a Redefining Hong Kong panel discussion hosted by the South China Morning Post.

Marshall Nicholson, a managing director with Beijing-based investment bank CICC, pointed out that a US listing was very costly to small companies since they had to issue quarterly financial reports and faced stringent legal burdens such as the Sarbanes-Oxley Act.

"Greed is a good thing sometimes," said Nicholson, referring to the firms' decision to relist in Hong Kong in pursuit of a higher valuation.

Watch: The Redefining Hong Kong Debate Series II

Nicholson added that the development of the city's capital market had allowed it to offer a more diversified range of products, including more issuance of new shares, bonds and convertible securities, gradually moving away from a reliance on initial public market offerings.