Main­land in­flux spurs turn­around in HK eq­ui­ties

China Daily (Hong Kong) - - 20TH ANNIVERSARY OF HKSAR - By LIN WENJIE in Hong Kong cher­rylin@chi­nadai­lyhk.com

The dra­matic surge in the tally of Chi­nese main­land com­pa­nies floated in Hong Kong in the past two decades has led to a sig­nif­i­cant shift in the city’s tra­di­tion­ally prop­erty sec­tor-re­liant stock mar­ket, pro­vid­ing a more di­ver­si­fied struc­ture with ca­pa­cious choices for lo­cal and for­eign in­vestors.

Mar­ket pun­dits con­cur with the fact that main­land en­ter­prises have been mak­ing a pos­i­tive con­tri­bu­tion to the sta­bil­ity and growth of the lo­cal econ­omy, as well as cross-boundary in­te­gra­tion, and will con­tinue to pro­mote a “win-win” sce­nario for both Hong Kong and the main­land by ex­plor­ing new busi­ness op­por­tu­ni­ties un­der the frame­work of na­tional strate­gies.

“There has been a rad­i­cal change in th­ese 20 years re­gard­ing the quan­tity of main­land com­pa­nies listed in Hong Kong. Twenty years ago, only big State-owned en­ter­prises got listed here, such as Bei­jing En­ter­prises Hold­ings, but now many pri­vate and lo­cal-gov­ern­men­towned com­pa­nies from the main­land have gone pub­lic in the lo­cal stock mar­ket,” noted Gin­ger Cheng Sze-ching, head of Hong Kong and main­land cor­po­rates at DBS in Hong Kong.

Sta­tis­tics show there were 1,013 main­land en­ter­prises listed in Hong Kong as of March this year, ac­count­ing for 50.4 per­cent of the to­tal num­ber of listed en­ter­prises, and 63.7 per­cent of to­tal mar­ket cap­i­tal­iza­tion. In com­par­i­son, there were just 83 main­land com­pa­nies listed in Hong Kong 20 years ago, ac­count­ing for merely 8.5 per­cent of to­tal mar­ket cap­i­tal­iza­tion.

Along with the main­land’s rapid eco­nomic de­vel­op­ment, it’s noted that the qual­ity of main­land com­pa­nies has also gone up sub­stan­tially, with many of them hav­ing gained pop­u­lar­ity among lo­cal and over­seas in­vestors.

Tech be­he­moth Ten­cent Hold­ings Ltd, one of the most sought-after main­land en­ter­prises, be­came a Hang Seng In­dex con­stituent com­pany in 2008 — four years after its flota­tion. Its share price has soared nearly 300 times over its IPO price, with a mar­ket cap­i­tal­iza­tion of HK$2.6 tril­lion, mak­ing it one of the five most in­flu­en­tial com­pa­nies listed in the SAR.

“Hong Kong, as a global fi­nanc­ing hub, is the pri­mary choice of main­land com­pa­nies when it comes to rais­ing funds, due to its free flow of cap­i­tal, ac­cess to in­ter­na­tional and in­sti­tu­tional in­vestors, and a great pool of tal­ents and ex­per­tise. At the same time, Hong Kong’s stock mar­ket, which had largely banked

(Main­land firms) should de­velop and up­grade their ex­ist­ing com­pet­i­tive in­dus­tries to the next level, thereby con­sol­i­dat­ing Hong Kong’s po­si­tion as a world fi­nan­cial cen­ter.”

on prop­erty com­pa­nies in the past, now of­fers a much more di­verse en­vi­ron­ment,” said Tom Chan Pak-lam, chief ex­ec­u­tive of­fi­cer of Suc­cess Fi­nance Group and vicechair­man of the In­sti­tute of Se­cu­ri­ties Deal­ers Ltd in Hong Kong.

He said Hong Kong’s list­ing re­quire­ments and fi­nanc­ing costs are much lower than those of other places for com­pa­nies to col­lect money. And, no­tably, the city’s in­vest­ment is much more ma­ture and less volatile.

For cor­po­ra­tions that have al­ready sunk their roots in Hong Kong, ex­perts be­lieve they can make full use of their prime lo­ca­tion to achieve mu­tual ben­e­fit for Hong Kong and the main­land by us­ing Hong Kong as the spring­board to “go abroad”, cash­ing in on na­tional strate­gies, in­clud­ing the Belt and Road (B&R) Ini­tia­tive.

Cheng’s con­fi­dent Hong Kong can and will play a sig­nif­i­cant role in the in­ter­na­tion­al­iza­tion process of main­land com­pa­nies by pro­vid­ing ex­cel­lent tal­ents, use­ful mar­ket in­for­ma­tion and var­i­ous fi­nan­cial prod­ucts.

“We’ ve seen a grow­ing num­ber of main­land com­pa­nies that have gone global via Hong Kong in th­ese 20 years,” she said.

Lai Xiaomin, chair­man of China Huarong As­set Man­age­ment, called for main­land com­pa­nies in Hong Kong to lever­age the op­por­tu­ni­ties aris­ing from the B&R Ini­tia­tive.

“They should de­velop and up­grade their ex­ist­ing com­pet­i­tive in­dus­tries to the next level, thereby con­sol­i­dat­ing Hong Kong’s po­si­tion as a world fi­nan­cial cen­ter,” he said.

The State-run bad-debt cleanup agency raised HK$17.8 bil­lion in an IPO in Hong Kong two years ago. It plans to set up a B&R de­vel­op­ment fund of up to $3 bil­lion to fi­nance in­fra­struc­ture projects in coun­tries and re­gions in­volved in the mas­sive pro­ject.

CHINA DAILY PRO­VIDED TO

Hong Kong, as a global fi­nanc­ing hub, is the pri­mary choice of main­land com­pa­nies when it comes to rais­ing funds.

Lai Xiaomin,

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