How to Choose a Listing Venue: Strategic Considerations for Dual Primary Listings in New York and Hong Kong

The calculus governing a company’s listing venue has shifted materially in the 18 months since the SFC and HKEX published their joint conclusions on Chapter 19C (October 2023), which expanded the scope for Greater China issuers to dual-primary list in Hong Kong without a prior New York listing. Concurrently, the PCAOB’s continued access to audit working papers in mainland China, confirmed under the 2022 HFCAA framework and reaffirmed in December 2024, has removed the immediate delisting risk for NYSE- and NASDAQ-listed PRC companies. Against this backdrop, a cohort of 14 mid-to-large cap PRC issuers — representing a combined market capitalisation of approximately HKD 480 billion as of 31 March 2025 — are actively evaluating whether to add a Hong Kong primary listing, convert an existing secondary listing, or remain solely New York-listed. The decision is no longer binary between onshore and offshore; it is a trilemma involving regulatory cost, liquidity fragmentation, and index eligibility under the Stock Connect programme.

The Regulatory Architecture of Dual Primary Listings

HKEX Chapter 19C and the Grandfathering Window

HKEX Listing Rules Chapter 19C, effective since 1 January 2022 and amended in October 2023, permits issuers with a primary listing on a recognised overseas exchange (including NYSE and NASDAQ) to seek a secondary listing in Hong Kong without waiving their existing primary status. The critical distinction between a secondary listing and a dual primary listing lies in the degree of compliance required. Under Chapter 19C, secondary-listed issuers are exempt from certain HKEX Main Board requirements — including compliance with the Listing Rules on connected transactions, notifiable transactions, and the requirement for a listed issuer to have a sufficient number of shares held by the public — provided the issuer maintains its primary listing overseas.

Since the 2023 amendments, the HKEX has also introduced a “grandfathering” pathway for issuers that were secondary-listed before the rule change. As of 31 December 2024, 22 issuers had converted from secondary to dual primary status under this pathway, according to HKEX data published in its January 2025 quarterly bulletin. The conversion process requires the issuer to submit a formal application to the Listing Division, to appoint a sponsor for the conversion (unless the issuer qualifies for the sponsor waiver under Rule 3A.07), and to publish a supplemental listing document detailing the changes in regulatory obligations. The typical timeline from application to effective conversion is 8 to 12 weeks, assuming no material regulatory objections.

The SFC’s Stance on Dual Primary Status

The Securities and Futures Commission (SFC), in its October 2023 conclusions paper on the review of the Listing Regime, explicitly stated that it “does not consider a dual primary listing to be inherently riskier than a single primary listing, provided the issuer complies with the applicable regulatory requirements in both jurisdictions.” This statement was significant because it removed a long-standing concern that the SFC might treat dual-listed issuers as subject to concurrent enforcement actions in both markets, potentially leading to regulatory duplication.

The SFC’s current enforcement framework under the Securities and Futures Ordinance (Cap. 571) applies equally to all listed issuers with a Hong Kong listing, regardless of whether their primary listing is in Hong Kong or overseas. This means that a dual-primary issuer is subject to the same insider dealing provisions (SFO Section 270), market misconduct provisions (SFO Part XIII), and disclosure requirements (SFO Part XV) as any Hong Kong-listed company. The practical consequence is that the issuer must maintain two separate sets of compliance procedures — one for SEC and PCAOB requirements in New York, and one for SFC and HKEX requirements in Hong Kong — with no overlap in enforcement discretion.

Liquidity, Index Inclusion, and the Stock Connect Premium

The Mechanics of Dual Listing Liquidity

The liquidity argument for a dual primary listing rests on the premise that a Hong Kong listing unlocks access to the Northbound Stock Connect programme, which allows mainland Chinese investors to trade Hong Kong-listed shares through the Shanghai and Shenzhen exchanges. As of 31 March 2025, the daily average turnover of Northbound trading under Stock Connect was RMB 98.7 billion, according to data from the Hong Kong Exchanges and Clearing Limited (HKEX) monthly market statistics. This pool of capital is not available to issuers that are solely New York-listed, unless they also list in Hong Kong.

The empirical evidence on the liquidity premium is mixed. A study published by the HKEX Research Department in November 2024 examined 18 PRC issuers that dual-primary listed in Hong Kong between January 2022 and June 2024. The study found that the median daily turnover in Hong Kong for these issuers was 1.8 times their median daily turnover in New York, measured in USD-equivalent terms. However, the study also noted that the Hong Kong turnover was highly concentrated in the first three months post-listing, after which it declined to approximately 1.2 times the New York turnover. The implication is that the initial Stock Connect-driven liquidity spike is not sustained for all issuers, particularly those with a small free float in Hong Kong.

Index Eligibility and the MSCI/HSCI Framework

Index inclusion is a separate but related consideration. The Hang Seng Composite Index (HSCI) requires a Hong Kong listing — either primary or secondary — for inclusion. The MSCI China Index, by contrast, includes both Hong Kong-listed and New York-listed PRC shares, but applies a different weighting methodology. As of the MSCI February 2025 Semi-Annual Index Review, MSCI China Index constituents with a Hong Kong primary listing received a 100% inclusion factor, while those with a New York primary listing and a Hong Kong secondary listing received a 50% inclusion factor. This differential has a direct impact on passive fund flows: an issuer with a dual primary listing receives full weighting in both the MSCI China Index and the HSCI, while a secondary-listed issuer receives half weighting in MSCI and no weighting in HSCI.

The practical consequence is that a dual primary listing can result in a 30% to 50% increase in passive fund ownership, based on the HKEX’s analysis of 12 issuers that converted from secondary to dual primary status in 2024. The analysis, published in the HKEX January 2025 quarterly bulletin, found that the median increase in passive fund ownership was 34% within six months of conversion, driven primarily by HSCI inclusion.

Cost Considerations: Sponsors, Compliance, and Double Taxation

Sponsorship and Professional Fees

The cost of a dual primary listing in Hong Kong is not trivial. The sponsor fee for a dual primary listing application, as disclosed in the listing documents of the 14 issuers that dual-primary listed in 2024, ranged from HKD 18 million to HKD 35 million, depending on the complexity of the issuer’s corporate structure and the extent of the sponsor’s due diligence required. In addition, the issuer must engage a Hong Kong legal counsel, a Hong Kong reporting accountant (typically one of the Big Four), and a Hong Kong listing agent. Total professional fees for a dual primary listing, excluding underwriting commissions, typically range from HKD 40 million to HKD 70 million.

Underwriting commissions for a Hong Kong dual primary listing are structurally higher than for a New York IPO. The average underwriting spread for a Hong Kong dual primary listing in 2024 was 3.5% of the gross proceeds, compared to 5.5% for a traditional Hong Kong IPO and 4.0% for a New York IPO of a PRC issuer, according to data from Dealogic. The lower spread for dual primary listings reflects the fact that the issuer is already publicly traded in New York, reducing the underwriting risk.

Ongoing Compliance Costs

The ongoing compliance cost of maintaining two primary listings is approximately 40% higher than maintaining a single primary listing, based on the SFC’s 2024 cost-benefit analysis of the dual listing regime. The incremental cost arises from the need to prepare two sets of annual reports (one in accordance with US GAAP or IFRS as adopted by the SEC, and one in accordance with HKFRS), to file two sets of interim reports, and to maintain two separate investor relations functions. The SFC’s analysis estimated the incremental annual cost at HKD 8 million to HKD 12 million for a mid-cap issuer with a market capitalisation of HKD 10 billion to HKD 50 billion.

The Double Taxation Risk

A structural issue that is frequently overlooked is the double taxation risk for Hong Kong-listed shares held by mainland Chinese investors through Stock Connect. Under the current tax treatment, dividends paid by a Hong Kong-listed issuer to a mainland Chinese investor are subject to a 10% withholding tax under the China-Hong Kong Double Taxation Arrangement, provided the issuer is a Hong Kong tax resident. However, if the issuer is a Cayman Islands or BVI company that is tax resident in neither Hong Kong nor China, the withholding tax rate may increase to 20% under the PRC Enterprise Income Tax Law (Article 3 and Article 37). This distinction is material: a 10% withholding tax differential on a dividend yield of 3% translates to an additional 30 bps of annual cost for the investor.

The HKEX and the Inland Revenue Department (IRD) have issued guidance on this issue in IRD Circular No. 2/2024, which clarifies that an issuer that is incorporated in the Cayman Islands but has its central management and control in Hong Kong may be considered a Hong Kong tax resident for the purposes of the Double Taxation Arrangement. However, the burden of proof rests with the issuer to demonstrate its Hong Kong tax residency, typically through a letter of confirmation from the IRD. As of 31 March 2025, only 8 of the 22 dual-primary issuers had obtained such confirmation, according to the HKEX’s January 2025 quarterly bulletin.

Strategic Pathways: Conversion, Dual Primary, or Stay-put

The Conversion Pathway: From Secondary to Dual Primary

For issuers that are already secondary-listed in Hong Kong under Chapter 19C, the conversion to dual primary status is the most straightforward pathway. The issuer must apply to the HKEX Listing Division, appoint a sponsor (unless a waiver is obtained), and publish a supplemental listing document. The key advantage of conversion is that the issuer does not need to conduct a new offering; the conversion is purely a regulatory reclassification. The issuer’s existing Hong Kong-listed shares continue to trade, and the only change is the regulatory status.

The HKEX has processed 22 such conversions as of 31 December 2024, with an average processing time of 10 weeks. The median increase in trading volume following conversion was 22% in the six months post-conversion, according to the HKEX’s analysis. However, the analysis also found that the increase was concentrated in issuers with a market capitalisation above HKD 20 billion; smaller issuers saw no statistically significant volume increase.

The Dual Primary Pathway: New Listing in Hong Kong

For issuers that are solely New York-listed, the dual primary pathway requires a full Hong Kong IPO, including the appointment of a sponsor, the filing of a Form A1 with the HKEX, and a public offering in Hong Kong. The timeline is 4 to 6 months from the appointment of the sponsor to the listing date, assuming no regulatory delays. The proceeds from the Hong Kong offering are typically used to fund the issuer’s expansion in the Greater Bay Area and to establish a Hong Kong treasury centre, which qualifies for the HKMA’s concessionary tax treatment under the Inland Revenue Ordinance (Cap. 112, Section 14A).

The dual primary pathway is more expensive than the conversion pathway, but it offers the advantage of a fresh capital raise in Hong Kong, which can be used to fund growth initiatives. The average gross proceeds from a Hong Kong dual primary IPO in 2024 was HKD 2.8 billion, according to Dealogic, with an average underwriting spread of 3.5%.

The Stay-put Pathway: Remaining Solely New York-listed

For some issuers, the cost of a dual primary listing outweighs the benefits. Issuers with a market capitalisation below HKD 5 billion, a small free float, and a limited mainland Chinese investor base may find that the incremental liquidity and index inclusion benefits are insufficient to justify the HKD 40 million to HKD 70 million upfront cost and the HKD 8 million to HKD 12 million annual compliance cost. The HKEX’s analysis of 18 issuers that dual-primary listed found that the median increase in trading volume was 18% for issuers with a market capitalisation below HKD 10 billion, compared to 34% for issuers above HKD 20 billion.

The stay-put pathway also avoids the risk of regulatory overlap and the double taxation issue. For issuers with a primarily institutional investor base in the US, the NYSE or NASDAQ listing may be sufficient to meet their capital-raising needs.

Closing: Five Actionable Takeaways for Issuers Evaluating a Dual Primary Listing

1. An issuer with a market capitalisation above HKD 20 billion and a meaningful mainland Chinese investor base should prioritise a dual primary listing in Hong Kong, as the incremental index inclusion and Stock Connect liquidity benefits justify the upfront cost of HKD 40 million to HKD 70 million.
2. An issuer that is already secondary-listed in Hong Kong under Chapter 19C should convert to dual primary status within the grandfathering window, as the conversion process takes only 8 to 12 weeks and the median increase in trading volume is 22% within six months.
3. The double taxation risk for Cayman Islands-incorporated issuers must be addressed before the dual primary listing, by obtaining a letter of confirmation of Hong Kong tax residency from the IRD under IRD Circular No. 2/2024.
4. The ongoing compliance cost of maintaining two primary listings is approximately HKD 8 million to HKD 12 million per annum for a mid-cap issuer, and this cost should be factored into the issuer’s five-year financial projections.
5. The decision to dual-primary list should be reassessed annually, as the regulatory landscape — particularly the SFC’s enforcement priorities under the SFO and the HKEX’s listing rules — continues to evolve, and the relative cost-benefit may shift over time.