FAST NEWS: Yum China Shifts Hong Kong Listing to Primary Status

The latest: Yum China Holdings, Inc. (YUMC.US; 9987.HK), operator of U.S. fast food giant Yum Brands Inc.’s (YUM.US) KFC and Pizza Hut chains in China, on Wednesday announced it will convert its secondary listing status in Hong Kong to primary status effective Oct. 24.

Looking up: By obtaining primary status for its Hong Kong listing, Chinese mainland investors can eventually trade Yum China’s shares through a program linking Hong Kong and mainland Chinese stock exchanges, thereby expanding its investor base and trading volume.

Take Note: Unlike the secondary listing status Yum China currently holds in Hong Kong, companies with primary status are subject to higher regulatory requirements by the Hong Kong Stock Exchange.

Digging Deeper: An audit dispute between U.S. and Chinese securities regulators involving inspections of U.S.-listed Chinese companies like Yum China showed signs of easing at the end of August , with the signing of an information-sharing agreement between the two countries. Before that, Yum China and more than 200 other U.S.-listed Chinese stocks had faced the risk of forced delistings from New York, leading many to seek concurrent listings in Hong Kong to hedge against the delisting threat. Yum China was one of the first companies to be audited under the new information-sharing agreement, whose results have yet to be announced. Thus, it will be able to retain its status as a listed company even if it fails to pass the audit requirements and is delisted from New York.

Market Reaction: Yum China’s Hong Kong-listed shares fell 2.5% to HK$356.40 by the midday break on Thursday, and now trade in the middle of their 52-week price range. 

Translation by Jony Ho

To subscribe to Bamboo Works free weekly newsletter, click here