‘PRIMARY CONNECT KEY FOR HKEX TO ATTRACT ARAMCO
Making HK-based IPOs available to China investors will be perfect catalyst, says CEO
HONG KONG Exchanges and Clearing Ltd’s (HKeX) bid to win Saudi Arabian Oil Co’s (Aramco) listing would get a boost from having a primary connect trading system with mainland China, according to its chief executive officer (CEO).
HKeX has so far created three links with domestic Chinese markets, and CEO Charles Li has plans for several others.
The primary connect, which would see shares in initial public offerings (IPO), here, made available to mainland investors, would act as a lure to major companies, he said.
“For Saudi Aramco to consider listing in Hong Kong, just a pure Hong Kong listing would probably not be compelling,” said Li.
To be able to list in the city and sell shares into major Chinese institutions would be the “perfect catalyst” for primary connect, he said.
Saudi Arabia aims to sell about five per cent of Aramco in an IPO next year, and stock exchanges from the United Kingdom to Japan are vying for what may be the world’s richest public debut.
The main contenders are bourses in London, New York, Hong Kong, Tokyo, Singapore and Toronto.
Primary connect is the “next big thing”, said Li, though he added that it “will take a while”.
The exchange operator’s shares fell as much as 5.4 per cent yesterday morning, its biggest intraday drop in more than a year.
HKeX posted second-quarter profits of HK$1.78 billion (RM986.7 million) on Wednesday, a 14 per cent increase from HK$1.55 billion a year earlier.
Revenue for the quarter was HK$2.76 billion, said the company, compared with HK$2.73 billion previously.
Li said in an earnings conference on Wednesday that there wasn’t a timetable for new links between Hong Kong and the mainland.
As well as primary connect, other suggested systems would include exchange-traded funds and derivatives.