HK ready for US-listed mainland firms after reforms
Valuation threshold for overseas-traded companies lowered to HK$3b
Hong Kong is ready for US-listed mainland companies if they decide to seek a flotation in the city following the latest regulatory reforms, according to Financial Secretary Paul Chan Mo-po.
The development of the Greater Bay Area, green financing and the mainland central bank’s digital currency would enhance the appeal of the city’s capital market, he added.
Chan painted an upbeat picture for the city’s capital market prospects despite the threat of a fifth wave of Covid-19, even as funds raised from the stock market shrank by 17 per cent last year, the first decline since 2017.
“With mainland companies seeking to grow and still hoping to explore international financing in the face of rising regulatory uncertainty in the United States, it is likely we will see more China concept stocks return from the overseas market,” Chan said in a speech at the 15th Asian Financial Forum yesterday. “We are actively making preparations for that.”
In December, the US moved a step closer to delist mainland firms from American exchanges. The Securities and Exchange Commission said it would start to identify non-compliant foreign firms under a law enacted last year that would require them to open their books to US scrutiny. Companies risk being kicked off the New York Stock Exchange and Nasdaq if they fail to comply with the rules for three years until 2023.
Meanwhile, bourse operator Hong Kong Exchanges and Clearing (HKEX) now allows companies with a minimum valuation of HK$3 billion that have been trading in the US or Britain to launch a secondary listing, down from HK$40 billion previously.
HKEX also adopted rules allowing so-called blank-cheque companies, also known as special-purpose acquisition companies, to list here, opening another fundraising avenue for start-ups.
Chan said these reforms “would boost our competitiveness in attracting more such stocks to list in Hong Kong”.
He also said the Hong Kong Monetary Authority’s (HKMA) initial tests of the People’s Bank of China’s digital yuan, or e-yuan, in the city were “encouraging” and the next phase included expanding the participation of the city’s banks and topping up of the e-yuan wallet via HKMA’s Faster
Payment System electronic transfer network.
The HKMA is also exploring the prospect of launching a digital Hong Kong dollar, or e-HKD.
Meanwhile, other panellists at the forum said companies and local governments in the bay area could issue green bonds or other products in Hong Kong to finance their projects.
“Hong Kong is a super connector to link the world with the Greater Bay Area and other mainland cities,” said King Au Kinglun, executive director of the Financial Services Development Council, which promotes the city as a financial centre.
“The mainland government and companies can tap funds from international investors by issuing green bonds or other products in Hong Kong.”