Photo Credit: Ruslan Bardash

China’s Tencent Music Entertainment Group opened on the Hong Kong stock market yesterday to a lackluster debut.

Tencent Music made its debut on the Hong Kong exchange after announcing last week that New York would remain its primary listing. The listing was carried out by introduction, meaning no new shares or capital were raised in the transaction. One US-listed share represents two of its Hong Kong shares. The opening price for the stock fell flat at $18 HK dollars ($2.29) and continued its slide on its second day.

Tencent Music’s stock is down 33% so far in 2022 as a wave of negative sentiment towards Chinese tech companies takes hold. Tencent is just one of the latest companies to opt for a second listing on the Hong Kong stock exchange over the threat of being delisted in New York. The kerfuffle is over auditors that didn’t give U.S. inspectors a peek at the books of Chinese businesses. In order to remain on U.S. stock exchanges, Chinese businesses must play along.

On August 26, 2022, the China Securities Regulatory Commission and the U.S. Securities and Exchange Commission (SEC) agreed on audit protocols so these inspectors may do their jobs. U.S. officials are now in Hong Kong to start reviewing U.S. listed companies–including Tencent Music. Tencent Music has a current market capitalization of around $7.76 billion.

These audits are expected to take upwards of two-and-a-half months to complete. Companies that are expected to see an impact include Alibaba, Tencent Holdings, Weibo, Baidu, and NetEase. Tencent Music reported a 25% year-over-year jump in paid subscribers for its Q2 2022. NetEase’s Cloud Music is also listed on the Hong Kong stock exchange.

“We are proud to celebrate our successful listing on the Main Board of the stock exchange of Hong Kong,” says Cussion Pang, Executive Chairman of Tencent Music Entertainment. “We are truly grateful to our users for being part of our ecosystem and our journey, our employees for being our greatest asset, our partners and investors for their trust in us, and all of those who have supported us in making this achievement possible.”