Shares of Chinese Tesla rival fall on Hong Kong debut

GUANGZHOU, China — Shares of U.S.-stated electric auto maker Xpeng rose at the open up just before turning negative on Wednesday in their Hong Kong debut.

Xpeng issued 85 million Class A normal shares at a value of 165 Hong Kong dollars every single. Those shares opened at 168 Hong Kong bucks, a 1.8% increase. Shortly soon after, they fell to 162.50 Hong Kong dollars, all around 1.5% down below its listing price tag.

The electric carmaker is currently stated in the U.S. Normally, Chinese organizations detailed on Wall Street will do what’s acknowledged as a secondary listing, ordinarily in Hong Kong. This is where a corporation, outlined on 1 trade, goes on to offer shares on an additional.

But Xpeng’s share featuring is a dual-main listing. That means it will be subject matter to the policies and oversight of both equally U.S. and Hong Kong regulators, which is not the case with a secondary listing.

The electric carmaker explained last month that it would cost shares at no additional than 180 Hong Kong pounds every. Xpeng elevated gross proceeds of 14.02 billion Hong Kong bucks ($1.8 billion).

U.S.-detailed Chinese organizations have appeared to list in Hong Kong as a way to hedge against tensions between China and the United States.

Before this yr, U.S. Securities and Trade Fee adopted rules that impose stricter auditing prerequisites on international companies shown in the U.S. These specifications have the menace of delisting for providers that run afoul of the regulations.

“I would say our Hong Kong listing is a very strategic conclusion. In it, I assume naturally, you know, hedging versus geopolitical challenges is only one of the factors,” Brian Gu, president of Xpeng, instructed CNBC’s Emily Tan.

“But in the very long run however, we would like to have a listing location that get us closer to property simply because we are a buyer brand name in China. In the long run we want our buyers to be our shareholders, and having the twin major listing position in HK (Hong Kong) will give us eligibility to be linked to Chinese funds marketplaces.”

Browse additional about electrical autos from CNBC Professional

But Chinese companies listed in the U.S. could also deal with scrutiny at residence. On Tuesday, Beijing mentioned it will phase up supervision of corporations listed abroad. The federal government ideas to boost policies all-around cross-border info flows and stability. The shift arrives soon after regulators released a cybersecurity evaluate into journey-hailing enterprise Didi and compelled application retailers to take out it from download, days immediately after its U.S. first public presenting.

Xpeng, recognised for its P7 sedan and G3 SUV, sent 6,565 cars in June — which is a 617% enhance year-on-calendar year and a regular record. The Guangzhou-dependent firm sent 17,398 vehicles in the second quarter of the year, previously mentioned its have advice.

In April, the carmaker launched its third production model, the P5 sedan, as levels of competition ramps up with rivals such as Li Vehicle, Tesla and Nio.