HKEX: Talks to win Saudi Aramco listing will not stop
CEO: China primary stock connect key to securing Aramco listing
HONG KONG: Hong Kong Exchanges & Clearing Ltd (HKEX) is still in talks with oil giant Saudi Aramco, with the bourse’s planned IPO investment link with China key to clinching the potential listing, chief executive Charles Li told Reuters.
In February, Li said the stock exchange would bank on its role as a gateway to mainland China’s deep-pocketed investors to win the coveted listing of state oil firm Saudi Arabian Oil Co .
Addressing a Reuters Newsmaker event, Li, who has previously worked with JPMorgan and Bank of America Merrill Lynch in China, said “the talk will never stop” in trying to woo Aramco, with China now one of the largest importers of Saudi crude.
Li said, however, that a so-called primary stock connect, which would allow mainland Chinese investors to participate in Hong Kong initial public offerings (IPOs), would be pivotal in convincing Aramco to list in the Asian financial hub.
He did not give a timeline for the start of the primary connect programme, the talks for which are ongoing. Saudi authorities plan to list up to 5% of the world’s largest oil producer on the Saudi stock exchange in Riyadh, the Tadawul, and also one or more international markets, potentially raising as much as US$100bil.
Saudi Arabia favours New York for the main foreign listing, even though some financial and legal advisers have recommended London as a less problematic and risky option, sources told Reuters last month.
“Having a rival liquidity pool that is supported by domestic Chinese liquidity that trades and invests at a very different valuation ... allows them to walk on two legs globally at different clocks of trading,” Li said.
Li also said he expects to conclude final recommendations “in the coming weeks” on rules for a new trading board, aimed at luring secondary listings from Chinese firms such as Baidu Inc, as well as “new economy” startups in sectors such as the Internet and bio-tech- nology.
HKEX started public consultation in June on the possibility of a board allowing listings of companies with dual-class share structures, such as Alibaba Group Holding Ltd. Alibaba was unable to list in Hong Kong under current rules, so the e-commerce firm took its US$25bil IPO to New York instead.
Asia’s third biggest equity bourse by market value is eager to increase its exposure to new, high-growth sectors to remain among the world’s top destinations to list shares.
Public consultation for the new board ended last month, with financial industry professionals still divided over the matter.
Li said there might be a need for another round of consultation to decide how the new board and weighted voting rights would be implemented.
Hong Kong’s government and regulators are increasingly concerned that a series of scandals, many centred on mainland Chinese companies listed in Hong Kong, has tarnished the territory’s reputation as a financial centre. Hong Kong gained unwanted international attention from scandals at firms including Hanergy Thin Film Power Group Ltd and China Huishan Dairy Holdings Co Ltd, while a penny stocks crash earlier this year impacted the Growth Enterprise Market.
The bourse’s second trading board - which has less stringent listing criteria than the main board - has seen high levels of volatility due to very concentrated shareholdings and concerns have grown over the quality of companies listed there.