Derivatives trading see boost in volume, value amid Covid-19

AMTD aims to be ‘connector’ for Hong Kong companies to list here amid geopolitical tensions

When Hong Kong companies list outside their home market, Singapore has traditionally been on the shortlist. Of the 700-odd companies currently listed on the Singapore Exchange

(SGX), 24 are domiciled in Hong Kong, according to Bloomberg data. Many of these companies were listed on the local bourse after the British returned Hong Kong to China in 1997. Now, as geopolitical tensions have flared up, could more Hong Kong companies be listing their shares here?

According to Calvin Choi, CEO of AMTD

International, uncertainties arising from geopolitical tensions are making the operating environment increasingly difficult for many companies. Geopolitical skirmishes could cause collateral damage to cross-border transactions and deals, impeding their growth.

As such, for companies to become successful and minimise risks, he reckons that they cannot remain operating solely in one location. That is where a foreign listing may come in useful. “Companies need to go beyond staying put in one place,” he tells The Edge Singa

pore in a recent interview.

Choi notes that AMTD International, which is a Hong Kong-headquartered financial services company and the first company to list on SGX via a dual-class shares (DCS) structure, is ready to help companies tap other financial markets. “We serve as a connector. We do not connect within Hong Kong only. We connect [companies] from Southeast Asia to Hong Kong and to China, or [companies] from China trying to go to Southeast Asia,” he says.

AMTD deals with investment banking, asset management and strategic investments. Last year, it completed 16 Hong Kong IPOs, six US IPOs and two equity capital market transactions, with a total financing amount of over US$4.6 billion ($8.9 billion), as well as 24 international debt capital market transactions with a total financing amount of over US$6 billion. More recently, on Jan 17, AMTD helped Guangzhou-based audio community company Lizhi list on the Nasdaq, raising some US$45.1 million.

Last year, Hong Kong was engulfed in protests over a proposed bill that would allow the extradition of criminals to mainland China. The demonstrations, which spanned several months, turned violent and even evolved into a broader anti-China and pro-democracy movement.

Hong Kong’s chief executive Carrie Lam repeatedly emphasised that the legislation was necessary to allow the territory to better uphold justice. But critics feared that dissidents could be hauled away and be subject to China’s judicial system, which is seen to lack transparency. The extradition bill eventually got scrapped.

Tensions, however, arose again. In May, China’s parliament overwhelmingly approved a national security law on Hong Kong. The new legislation will tackle activity related to secession, subversion, terrorism and foreign interference. Critics argue that the move violated Hong Kong’s mini constitution called the Basic Law, which states that Hong Kong has the right to enact its own national security law.

In response, US Secretary of State Mike Pompeo declared that Hong Kong was no longer autonomous from China. This could jeopardise the city’s special trade relationship with the US and its standing as an international financial hub. It could also threaten to derail a trade truce between the US and China. Both countries had on Jan 15 signed Phase One of a trade deal that has repealed some tariffs and increased the trading of each other’s goods.

On late June 30, the national security law came into effect in Hong Kong. Protests erupted again, leading to the arrest of at least 370 people.

When asked if Hong Kong’s geopolitical situation would prompt more companies to consider listing in Singapore than in Hong Kong, Choi declined to comment. Similarly, with US-China trade tensions flaring up again, Chinese companies trying to list in the US markets might receive chilly reception from both investors and regulators because of nationalist reasons and therefore a dual-listing at a more accommodating location such as Singapore might just be possible.

Choi notes that AMTD has a pipeline of companies wanting to list here and in other Southeast Asian markets. These companies are from across Asia and are not necessarily from new economy sectors, he says.

With AMTD’s listing here, albeit a secondary one, Choi says the company has ambitions to be more active in Southeast Asia. This includes not just the Singapore equity market but also the Thai and Vietnam equity markets. He notes that companies listed in these markets are seeing good growth and trade volume of their shares. Moreover, more international institutions are entering these markets, he points out.

AMTD signed a long-term strategic partnership with SGX on May 5. This collaboration aims to promote the development of Singapore’s capital markets and strengthen connectivity between Singapore, Asean, the Greater Bay Area, the rest of China and the Middle East.

AMTD will utilise its SpiderNet eco-system to connect and promote collaboration between its partners. They include shareholders, clients, government bodies, academic institutions and industry associations. “So overall, I’m very bullish in terms of how we can play a more active role,” he says.