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Baidu’s Shift to Dual Primary Listing: The Capital and Industrial Calculus Behind an 'Identity Upgrade'

By Heng Xin

Source | Bowang Finance

Recently, Baidu filed an announcement with the Hong Kong Stock Exchange stating that its board of directors has approved a voluntary conversion from secondary listing to dual primary listing on the Main Board of the Hong Kong Stock Exchange, pursuant to HKEX Guidance Letter HKEX-GL112-22. The change is expected to take effect within the year. Following the conversion, both the Hong Kong and Nasdaq listings will be considered primary, and American Depositary Shares (ADS) and Hong Kong shares will remain convertible into each other.

The news did not make significant waves in financial circles—after all, Alibaba, JD.com, Bilibili and others had already moved ahead, making Baidu a latecomer.

But viewed over a longer time horizon, Baidu’s move is far from arbitrary: In the first half of 2026, it just placed its AI chip subsidiary Kunlunxin on track for a simultaneous A+H IPO. In its Q1 earnings report, AI-related businesses accounted for more than half (52%) of core business revenue for the first time, with smart cloud infrastructure revenue reaching RMB 8.8 billion—a 79% year-over-year increase—and self-developed GPU cloud revenue surging 184% year-over-year.

Adjustments to capital structure are never isolated moves. Below, we unpack this 'listing conversion' across three layers: regulatory implications, strategic motivations, and valuation impact.

Secondary Listing vs. Dual Primary Listing: The Regulatory Differences Are Greater Than the Names Suggest

Many retail investors lump all forms of 'returning to list in Hong Kong' together, but secondary listing and dual primary listing operate under entirely different rules and consequences.

Secondary Listing: The U.S. listing is the primary market, while the Hong Kong listing serves as a 'secondary trading venue.'

Companies benefit from certain compliance exemptions under HKEX rules, resulting in faster processes and lower costs. However, the Hong Kong and U.S. listings remain linked—if the U.S. listing faces delisting risks due to legislation like the Holding Foreign Companies Accountable Act, the Hong Kong listing status could be adversely affected. Additionally, secondary-listed stocks carry an 'S' suffix in their ticker symbols and are ineligible for inclusion in Stock Connect, blocking access to southbound capital flows.

Dual Primary Listing: The Hong Kong and U.S. listings are independent and equal, each subject to local regulations regarding disclosure, internal controls, and compliance.

Its ability to withstand policy volatility in a single market has significantly strengthened; more importantly—removing the 'S' will make it eligible for inclusion in Stock Connect, opening the channel to mainland capital.

When Baidu returned to Hong Kong on March 23, 2021, it did so via a secondary listing under the ticker 09888.HK with an 'S' (later changed to Baidu Group-SW, where 'W' denotes weighted voting rights).

After this conversion, the 'S' will be removed, theoretically granting it entry into Stock Connect.

Following Hong Kong Exchanges and Clearing’s (HKEX) rule amendments in 2022, a pathway for 'voluntary conversion' was opened for China-based companies originally listed via secondary listings (as outlined in Guidance Letter GL112-22). Baidu is among the most prominent cases in this batch in terms of both scale and market attention.

According to Securities Daily,Zhang Yi, CEO of iiMedia Research, stated that for Baidu, a series of capital restructuring and industrial implementation initiatives scheduled for 2026 are fundamentally aimed at fully realizing the value of its complete industrial chain—spanning chips, frameworks, large models, and industry applications—while continuously reinforcing core AI technology R&D to solidify its leadership in global AI competition and achieve synergistic growth between industrial expansion and capital valuation.

Why is Baidu taking this step now?

Although the official announcement describes it as a 'voluntary conversion,' viewed within Baidu's 2026 capital and industrial roadmap, three key objectives converge.

First: hedging against long-term uncertainties on the U.S. side by adding a double layer of security to its capital foundation.

Although Sino-U.S. audit regulatory talks have made interim progress, for long-term institutional investors holding Baidu shares, tail-end risks such as 'what if something happens on the Nasdaq side...' have never been fully eliminated. Transitioning to dual primary listing ensures that even under extreme scenarios on the Nasdaq, the Hong Kong entity remains independently viable—a reassuring move for institutional shareholders.

Second: gaining access to Stock Connect is the real prize it wants.

Baidu's Hong Kong-listed shares currently see relatively low average daily trading volumes. On July 21, the stock price of 09888.HK was around HK$106, with a total market capitalization of approximately HK$289 billion and a trailing twelve-month (TTM) price-to-earnings (P/E) ratio of about 194x.

ThisThe elevated P/E ratio is partly due to recent earnings volatility and also reflects the market’s ongoing tug-of-war in pricing between the 'AI narrative' and the 'legacy search business base.'

Once included in the Stock Connect program, southbound capital can allocate to it. The liquidity premium combined with mainland institutions’ familiarity with the full-stack AI investment thesis could potentially support a re-rating of its valuation anchor—a path partially validated already by Alibaba following its shift to dual primary listing status.

Third layer: aligning with Kunlun Chip’s 'A+H' capital markets strategy.

This point hasn’t received enough market discussion yet. In January 2026, Kunlun Chip confidentially filed for a Hong Kong IPO, and by May had completed preparatory filings for a STAR Market listing, with Baidu retaining controlling ownership.

The parent company first streamlined its Hong Kong listing status into a dual primary listing before allowing its chip subsidiaryTo run on both A+H tracks—the parent and subsidiary are both structuring their presence across two capital markets under a 'dual-home' strategy, driven by the same underlying logic: reducing reliance on any single market, broadening access to long-term capital, and aligning with capital-intensive, long-cycle sectors like AI computing.

Zhang Yi made a particularly apt remark: 'Synchronized progress in capital and industrial initiatives reflects Baidu’s decade-long commitment to a full-stack self-reliant, long-term strategic vision.'

Switching listing status ≠ automatic valuation re-rating; three key points warrant sober analysis

Stories like this are prone to being swept up in loud proclamations of 'major positive catalysts.'

Objectively speaking, achieving dual primary listing status is a necessary but insufficient condition for valuation repair. These three aspects must be evaluated separately:

First, the liquidity improvement brought by Stock Connect is real, but its magnitude depends on index weightings and the pace of passive fund inflows.

Looking at previous batches of Chinese ADRs that switched to dual primary listings, they typically experienced a short-term boost from passive funds and southbound capital following inclusion in Stock Connect, but their medium- to long-term valuations ultimately reverted to fundamentals.

The current market divergence around Baidu isn’t about 'whether it’s accessible for purchase,' but rather 'why it’s still valued like an old-economy internet stock despite AI already accounting for 52% of its revenue.'

Second, US-listed stocksThe current price gap between ADRs and Hong Kong-listed shares is relatively small, and the arbitrage mechanism remains efficient after conversion.

On July 21, Baidu’s H-shares traded around HK$106, while the ADR-equivalent price was approximately HK$108, implying a roughly -2% discount relative to the H-share price—well within the normal range. After conversion, ADSs and H-shares remain interchangeable, preventing any sustained price divergence; thus, there’s no logic that the listing switch itself creates arbitrage opportunities.

Third, the real key to valuation lies in the pace of AI commercialization.

Q1 smart cloud revenue grew 79% year-over-year, and self-developed GPU cloud revenue surged 184%—impressive figures indeed. However, the market is still watching closely: the pricing per call and gross margins of the Wenxin large model, whether Apollo Go’s autonomous ride-hailing service can achieve profitability at the city level, and breakthroughs in external customers for Kunlun chips. These factors will determine whether Baidu transitions from being seen as a controversial stock trading at nearly 100x P/E to being priced as an AI leader—or remains stuck in a trading range.

One easily overlooked point: after achieving dual primary listing, Baidu must comply with boththe SEC’s and the SFC/HKEX’s disclosure and internal control requirements, which will significantly increase compliance costs.

For a large tech firm, this added cost isn’t material, but internal operational complexity increases notably.

Conclusion

Back to square one.

Baidu’s move to 'convert to dual primary listing' may appear, in isolation, as just another corporate announcement—but viewed holistically, it is one link in a chain of strategic actions slated for 2026: Kunlun Tech’s A+H listing, an upgraded Hong Kong listing status for the parent company, and AI revenue surpassing 50% of total income.

The ultimate goal of this trajectory isn’t simply 'returning to Hong Kong'—it’s about embedding the full-stack, self-developed narrative spanning 'chips, frameworks, large models, and applications' into a capital structure that offers cross-strait independence, broader funding channels, and stronger regulatory hedging.

For investors, the immediate trading window around the announcement itself may be brief—likely just an emotional pulse lasting a few days post-disclosure. What truly merits close monitoring are three developments: the timing of the conversion’s completion within the year, the pace of inclusion into Stock Connect, and the progress of Kunlun Tech’s IPO.

Only once these three milestones are sequentially achieved will Baidu have fully established its 'capital foundation' for the AI cycle.

As for whether valuation can break out on the back of this move—that hinges on continued scaling of AI revenue and margin improvement. The listing conversion merely wipes the table clean; the company still has to serve the meal itself.

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