Electronic boards display various stock prices at Exchange Square in Hong Kong on March 9, 2020. (ISAAC LAWRENCE / AFP)
Economists said that the central government’s policy of supporting mainland companies to list in Hong Kong will consolidate the city’s status as an ideal fundraising center, an asset management center and an international business hub.
This (China Concept stocks to pursue a listing in Hong Kong) will enhance the city’s equity market size, create more demand for Hong Kong’s financial services, and elevate the status of Hong Kong as the nation’s most prominent financial center.
Tang Heiwai, economics professor at HKU Business School and associate director of the Hong Kong Institute of Economics and Business Strategy
In May, Premier Li Keqiang held a rare nationwide meeting via teleconference with more than 100,000 participants, including provincial, city-level and county-level local government officials as well as state-owned companies and financial firms.
In the meeting, the premier warned that the nation is facing a hit to its economy which will be worse to a “certain extent” than in 2020 when the COVID-19 pandemic surfaced.
The State Council outlined 33 support measures to help businesses struggling to cope with the pandemic-battered economy, focusing on six dimensions: giving fiscal support, guiding monetary and finance policies, stabilizing investment and boosting consumption, maintaining food and energy security, securing the stability of industry chains and supply chains, as well as protecting people’s basic livelihoods.
Li made reference to Hong Kong, as he said that the central government will support more mainland enterprises to go for listings in Hong Kong, and promote qualified platform economy companies to seek overseas listings according to the law.
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“As Hong Kong is one of the most internationalized capital markets with a long history and a common law legal regime, the city is the ideal place for China Concept stocks to pursue a listing,” said Tang Heiwai, an economics professor at HKU Business School and associate director of the Hong Kong Institute of Economics and Business Strategy.
“This will enhance the city’s equity market size, create more demand for Hong Kong’s financial services, and elevate the status of Hong Kong as the nation’s most prominent financial center,” he added.
Hong Kong's Victoria Harbor is seen in this photo taken on May 12, 2021. (PHOTO / XINHUA)
The potential initial public offering candidates will be mainland life science companies and fintech firms, Tang argued, as listings will prompt these companies to invest in Hong Kong. “This will foster positive impacts on developments in Hong Kong in various aspects such as attracting talent and capital flows as well as enabling Hong Kong to connect with Shenzhen to become the global technology and innovation hub.”
Billy Mak Sui-choi, associate professor at Hong Kong Baptist University’s Finance and Decision Sciences Department, noted that more fundraising activities by mainland technology companies in Hong Kong would enhance the city’s attractiveness as an asset management center
Tang added that more mainland company listings taking place in Hong Kong will foster demand for Hong Kong financial services in the Guangdong-Hong Kong-Macao Greater Bay Area region.
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Billy Mak Sui-choi, associate professor at Hong Kong Baptist University’s Finance and Decision Sciences Department, noted that more fundraising activities by mainland technology companies in Hong Kong would enhance the city’s attractiveness as an asset management center.
“When more quality companies get listed in the Hong Kong bourse, this will create more financial products for asset managers,” he said.
This will ensure a positive spillover for Hong Kong, Mak argued, as the newly listed mainland companies will establish their physical business presences in Hong Kong to connect customers and investors. “This will strengthen Hong Kong’ status as the headquarter center and the international business hub.”
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Mak said Hong Kong is an ideal listing venue for mainland enterprises because listings in Hong Kong can help in mitigating risks arising from IPOs in the United States. Listings in Hong Kong can also enable these companies to secure IPO proceeds in foreign currencies that can facilitate their overseas expansion plans.