Amid geopolitical tensions, city can help mainland firms that are struggling to raise funds abroad, financial secretary says
Hong Kong plans more financial reforms to aid mainland Chinese companies facing investment and funding challenges in Western markets, the city’s financial head said on Monday, while a top central government official in Hong Kong called for support for “integrated development”.
“Under the shadow of geopolitical tensions, mainland enterprises now face unprecedented challenges in raising funds and investing in Western markets,” Financial Secretary Paul Chan Mo-po said at a forum discussing how to attract Chinese companies to list in Hong Kong.
“In response to these circumstances, Hong Kong will implement further reforms in its securities and financial markets to attract more domestic and international capital, supporting the development needs of projects and businesses in the Greater Bay Area.”
Qi Bin, the newly installed deputy at the central government’s liaison office in Hong Kong, reiterated that top leaders support the Greater Bay Area and said the region and listed enterprises should better support the “integrated development” of Hong Kong and the mainland.
“The Guangdong-Hong Kong-Macau Greater Bay Area is home to 5,000 listed companies and has played a significant role in participating in the construction of major cooperation platforms, deepening financial connectivity between the two regions, and promoting financial and trade collaboration between them,” Qi said.
Chan and Qi spoke at the Guangdong-Hong Kong-Macau Greater Bay Area Listed Companies Summit 2024 in Hong Kong.
“We hope that listed companies in the Greater Bay Area will actively leverage Hong Kong’s advantages, using Hong Kong as a base for overseas expansion,” Qi said. “While consolidating markets in Europe and the United States, they should also join hands to explore emerging markets such as Asean, the Middle East, and Latin America.”
The initial public offering (IPO) market in Hong Kong began to pick up in the second half of the year, following a long period of low activity. For the first six months, the Hong Kong stock exchange recorded its lowest first-half total of IPOs in more than two decades, according to data from the London Stock Exchange Group.
In June, QuantumPharm, an artificial intelligence drug researcher, raised HK$989.3 million (US$126.8 million), under a new rule Hong Kong announced late last year that allows pre-revenue technology unicorns to raise funds in Hong Kong.
In September, Chinese appliance maker Midea raised US$4.6 billion in the largest share offering in three years. Driven largely by this, Hong Kong regained its position as one of the world’s top five IPO venues as of the end of the third quarter.
Beijing has stepped up scrutiny of companies that want to list on domestic markets, leading many to pivot to listing in Hong Kong.
Hong Kong can also reposition itself as an important venue for the funding needs of Chinese companies seeking to expand overseas, said Ba Shusong, chief China economist at bourse operator Hong Kong Exchanges and Clearing.
“In recent years, we have observed a shift from the previously one-way flow of international capital into China to an increasing number of mainland enterprises leveraging Hong Kong to access international markets and provide supply chain services,” he said. “Currently, approximately half of mainland China’s investments routed through Hong Kong are ultimately directed to other regions.”
In addition to providing financing for mainland enterprises, the Hong Kong market also serves as a platform for mainland companies to go global, he added.
“It facilitates overseas mergers and acquisitions,” Ba said. “After the establishment of international businesses, these companies could also return to Hong Kong for listing.”