The Chinese battery manufacturer supplies automakers like Tesla, and Volkswagen, as well as Chinese startups like Nio, making it a key part in the global electric vehicle supply chain. Tomorrow’s trading performance will show global investor appetite for one of China’s most successful manufacturers as trade tensions between Washington and Beijing spark unprecedented market volatility.

CATL reportedly priced its shares at 263 Hong Kong dollars ($33.63), the top of its advertised pricing range. At a widely reported $4.6 billion, the battery maker’s secondary listing is roughly the same in size as last September’s Hong Kong debut of Chinese appliance maker Midea Group. 

By comparison, the U.S.’s largest listing for the year thus far is natural gas exporter Venture Global, which raised $1.75 billion in a January IPO. 

CATL’s shares currently trade in Shenzhen, but a Hong Kong listing will allow the company to tap a global pool of capital. Mainland Chinese markets are less liquid than Hong Kong’s stock exchange, in part due to the difficulty of non-Chinese investors to trade “A-shares,” a term for shares in mainland Chinese markets.

Global investors can more easily buy and sell “H-shares”, or shares of Chinese companies that trade in Hong Kong. Mainland Chinese investors may also want to trade Hong Kong-listed shares, even for those that also trade in Mainland China, due to the Chinese financial center’s more open markets. 

Southbound flows—mainland Chinese money flowing in and out of Hong Kong—have surged in recent months, as Chinese investors hope to trade in names like Alibaba and Tencent, closely associated with China’s AI boom. 

What is CATL?

Since its founding by Robin Zeng 2011, CATL has grown into a manufacturing juggernaut. The company now sells almost 38% of the world’s batteries, according to data from consultancy SNE Research cited by Bloomberg. Chinese EV manufacturer BYD is in a distant second, followed by Korea’s LG Energy. 

Beijing has supported China’s battery industry as part of a program to foster strategically important sectors. That strategy is bearing fruit: Batteries are just one sector where China is now leading globally, alongside EVs, rare earth processing, and renewable energy.

Last month, CATL claimed that its latest battery offers 320 miles of range on just five minutes of charge. Competitor BYD’s newest battery, unveiled earlier in the year, has a stated range of 250 miles. 

Still, CATL is facing a slower EV market. A fierce price war in the saturated Chinese market is squeezing margins across the industry. And global drivers have been slow to adopt full battery EVs, due to affordability and range concerns. 

CATL generated 362 billion yuan ($50.2 billion) in revenue last year, a 9.7% decrease. Still, profits rose 15% to $7 billion, a record for the company. The firm’s Shenzhen-traded shares are up 28% over the past 12 months.

U.S. unease

CATL is foraying into global markets amid growing trade tensions between the U.S. and China, which have sent markets careening over the past several weeks as tariffs are threatened, imposed, and then suspended. 

In early January, the U.S. Department of Defense labeled CATL as a “Chinese military company,” or a firm that’s helping to modernize China’s military. The blacklist has few direct repercussions, but could still act as a signal to other U.S. companies to reduce their involvement with CATL.

CATL, in January, called the U.S.’s designation a “mistake,” and threatened legal action. 

Two U.S. banks, JPMorgan and Bank of America, assisted CATL with its Hong Kong listing. Their involvement caught the eye of the U.S. Congress, with the Republican chair of the House of Representatives’ special committee on China demanding that the two banks pull out of the IPO.

In mid-May, CATL also switched its listing to a structure that bars domestic U.S. investors from taking part.

Another upcoming Hong Kong IPO—Chinese automaker Chery Group, who hopes to raise $1.5 billion—is proceeding without help from U.S. banks. Chery, whose low-cost EVs are winning customers in China and Europe, boasts Russia as one of its most important export markets.

Still, geopolitics may end up providing a silver lining to Hong Kong, which has seen a surge of listings from mainland Chinese companies hoping to tap global capital. Rising fears that the U.S. might delist Chinese companies from U.S. stock exchanges could also spur a rise in “homecoming” listings from U.S.-listed Chinese companies.