For the second time in a week, the Hong Kong Special Administrative Region welcomes one of China's biggest companies back home. JD.com made its debut on the city's stock exchange, with prices rising strongly on the same day as its 6.18 shopping festival. An expert said these homecoming tech giants would help foster significant jump in mainland portfolio inflows into the city.

The retail giant has raised almost 4 billion U.S. dollars in its secondary listing in the Fragrant Harbor. It comes only a week after a similar move by NetEase. JD.com has been the third one among the U.S.-listed Chinese tech firms that chose homecoming secondary listing in Hong Kong.

Outperformance during the coronavirus pandemic

It's a reasonable doubt whether it will be welcomed with warm enthusiasm or even excite the market.

While many market watchers tend to believe investors have a lot of reasons to be excited. The listing gives investors a chance to buy into China's second-biggest retailer when home deliveries are more important than ever.

June 18 is a renowned shopping festival in China, often seen as a rival to the Double Eleven shopping spree on November 11. JD.com's sales volume reached 239 billion yuan by 2 p.m. Thursday. That amount has already exceeded the platform's total sales during last year's 6.18 shopping festival. Analysts say its future growth prospects are also massive. Things like cloud computing, payment technology, and artificial intelligence are all areas being explored.

"It's not just the headline retailing business in the Chinese mainland, it's also the future prospects that it has by leveraging its balance sheet into other sectors with the access of course to the world's second-largest economy," said Jeffrey Halley, the Senior Market Analyst of Asia Pacific at OANDA.

In May, JD.com announced its Q1 earnings. Earnings per share were reported at 1.98 yuan (0.28 U.S. dollars), much better than Wall Street's estimate of 0.18 yuan. The company's revenue stood at 146.2 billion yuan, above analysts' estimates of 137 billion yuan. Other than beating estimates, the 146.2 billion yuan, or 20.6 billion U.S. dollars, was a 20 percent jump from a year ago. That's as the coronavirus pandemic forced more people to shop online. At the same time, net income plunged 85 percent to 1.1 billion yuan from a year ago, reflecting increased retailing costs and expansion of logistics services.

As of March 31, JD.com had more nearly 390 million annual active customer accounts, up 25 percent on the year. JD.com said its resilient business model helped drive solid top- and bottom-line results for the first quarter that exceeded expectations.

Impact on mainland portfolio flows into the city

With JD's secondary listing in Hong Kong, many analysts are wondering whether the significant jump in Chinese mainland investment flows into the city.

Hong Hao, Chief China Strategist at BOCOM international, echoed with positive answers.

"I think most people in the market are expecting that, if you look at the Hong Kong dollar exchange rate, it's been going very strong recently because a lot of money comes into this market to subscribe to all these big tech IPO," Hong added.

On June 18, the HK dollar stands at the 7.75 per greenback, the level had not been reached since early 2016. And the strong momentum still sustained, as the HK dollar traded at 7.749 per U.S. dollar on Thursday.

"There aren't many choices for you to invest in the Hong Kong stock market if you are tech investors. So I think to start from this year, with the rising competition between China and the U.S., more and more Chinese companies are going to come to Hong Kong to get listed. Therefore, you should expect more and more portfolio flow coming into this city as well," Hong further elaborated.

Attractiveness to Chinese new economy firms

Given the reforms, we saw on the Hong Kong Stock Exchange and China-U.S. frictions, industry insiders, see Hong Kong as the go-to destination in the medium to long term for China's new economy companies

According to a research note by Morgan Stanley, 28 U.S.-listed Chinese mainland companies, excluding Alibaba, are immediately eligible for listing in Hong Kong, and another four may meet the requirements within the next 12 to 18 months, with fund-raising targets totaling 14.5 billion dollars if all of them opt for Hong Kong for secondary listings.

What's more, these new economy firms can be included in the Hang Seng Index, which currently tracks a list of 50 stocks and is tilted toward financial services companies, which have an overall allocation of more than 48 percent. Last month, Morgan Stanley said in a report that, as a start, three Chinese tech stocks – e-commerce giant Alibaba, phone maker Xiaomi, and food delivery giant Meituan – are set to reap the benefits of being included.

Morgan Stanley also said that inclusion could bring in 3.7 billion U.S. dollars' worth of passive fund inflows for those three companies, among which 1.9 billion U.S. dollars will go to Alibaba, 1.3 billion U.S. dollars to Meituan and 0.5 billion U.S. dollars to Xiaomi.

"In the foreseeable future, I would say Hong Kong would be one of the top destinations for IPO, even though I think Shanghai and Shenzhen are catching up," Hong said.

While Hong mentioned that with the deepening reform going forward in Shanghai and Shenzhen exchanges, he wouldn't be surprised to see these two become top contenders for Chinese companies listing as well.