Hong Kong's capital market is often the second choice for companies to go public, which is related to the close relationship between Hong Kong and Chinese mainland and the financial status of China Xiangte. Table 4-2 shows the requirements for companies listed on the Main Board and GEM of the Hong Kong capital market.

◆ Advantages of listing in Hong Kong, China

(1) Geographical advantage: Hong Kong, China and Shenzhen are only separated by one line, and the transportation is very convenient, which provides convenience for Chinese enterprises to list in Hong Kong.

(2) Hong Kong, China and Chinese mainland share the same culture, and there is not much difference in the living habits and social etiquette of residents of the two places. With the spread of Mandarin in Hong Kong, the language problem of communication between the two places has also been resolved. Therefore, from a psychological point of view, it is easy for Chinese companies to use Hong Kong, China as a second choice for listing.

(3) The financial community has always classified New York, London and Hong Kong as the first camp of global financial centers, and Hong Kong, China has an irreplaceable position in the Asian financial market and even the global financial market, and its securities market is also one of the top ten securities markets in the world, which has a strong attraction to Chinese mainland enterprises.

(4) Enterprises can obtain diversified financing channels after successful listing in Hong Kong. After a successful listing in Hong Kong, Chinese companies can obtain funds through reverse takeovers in addition to their initial public offerings.

◆Limitations of listing in Hong Kong, China

(1) Capital scale. Compared with the U.S. securities market, Hong Kong's securities market is relatively small. According to statistics, the total market value of the stock market in Hong Kong, China, is only about 1/30 of the total market value of the stock market of the New York Stock Exchange and 1/4 of the NASDAQ, and the annual turnover of stocks is far behind that of the New York Stock Exchange and the NASDAQ.

(2) P/E ratio. The Hong Kong stock market has a P/E ratio of about 13, while the New York Stock Exchange has a P/E ratio of more than 30 and the NASDAQ has a P/E ratio of more than 20. This means that under the same conditions, the funds that can be raised by Chinese companies to list in Hong Kong are much smaller than those that can be raised by listing in the United States.

(3) Stock turnover rate. The turnover rate of the Hong Kong stock market is about 55%, which is much lower than the turnover rate of more than 70% on the New York Stock Exchange and 300% on the NASDAQ, which indicates that it is more difficult for companies to exit their shares after listing in the capital market of Hong Kong, China.

◆ Suitable for enterprises listed in Hong Kong, China

Large state-owned enterprises or private enterprises that are not willing to wait in line in the mainland market can go public in Hong Kong, while small and medium-sized private enterprises or foreign-funded enterprises can choose to list on the Growth Enterprise Market in Hong Kong, China, or buy a shell listing, but the funds that can be raised in these two ways are limited, and listing in the United States may be a better choice.