More technology companies from across the globe – not just those based in China – are likely to list on Hong Kong’s stock exchange in the next five to 10 years, particularly emerging tech leaders in Southeast Asia, according to Alibaba’s executive vice-chairman Joe Tsai.
Non-US investors, as well as sovereign wealth and pension funds, are increasing their allocations to Hong Kong and Asia as they seek to tap future growth in the region, Tsai said at a fireside chat as part of Hong Kong Exchanges and Clearing’s (HKEX) first Southeast Asia Forum on Thursday. HKEX is the operator of the Hong Kong bourse.
“Think about that huge capital base coming to Asia, and a lot of that is focused on Hong Kong, because Hong Kong already has a critical mass of high-quality technology companies listed here. Hong Kong is the place to be, because global capital is already here,” Tsai said at the virtual event.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
The session was closed to the media, but the HKEX provided a summary of the chat on its website on Friday.
Sovereign wealth funds are likely to increase their allocation to Asia from about 3 per cent to 10 per cent to 15 per cent over time, with much of that focused on Hong Kong’s equity market, said Tsai, who is a member of the HKEX’s International Advisory Council.
Southeast Asia could be important market to mine for listings in the future as the Hong Kong stock exchange competes with the likes of New York, Shanghai and Shenzhen as the top destination for global initial public offerings. The bourse has been the largest IPO market worldwide seven times in the past 11 years.
Charles Li Xiaojia, who is retiring as the HKEX’s CEO at the end of this month, has instituted a number of reforms in recent years to attract more top companies in the region to list on the exchange and make it the go-to destination for trading in the region as part of the bourse’s three-year transformation plan.
Those reforms have included changes that allow technology companies with so-called weighted voting rights and pre-revenue biotech companies to more easily list in the city.
Following the slate of reforms, Alibaba raised US$12.9 billion last year with a secondary listing on the Hong Kong stock exchange, the first of a series of “homecomings” by companies that initially listed in the US. Alibaba is the parent company of the Post.
JD.com, NetEase and ZTO Express are among a flurry of US-listed companies that have sought secondary listings in Hong Kong this year amid worsening relations between Beijing and Washington.
On Thursday, the US House of Representatives passed a bill that could force Chinese companies to delist from American bourses if they fail to comply with US audit oversight rules. US President Donald Trump is expected to sign the bill into law.
It is the latest escalation in tensions between the world’s two biggest economies over a variety of issues, including technology, trade and Hong Kong’s autonomy.
Ant Group, the operator of Alipay and an Alibaba affiliate, had been set to list in Shanghai and in Hong Kong last month in what was expected to be the world’s biggest initial public offering ever, but the IPO was scuttled at the last minute by regulators amid a broader crackdown on the nation’s tech industry.
China’s top securities regulator said last month the speed at which Ant is able to resume its listing will depend on how quickly it adapts to changing regulatory environment for fintech firms.
More Articles from SCMP
Quick guide to Hong Kong’s freshwater animals: an app comes to the rescue of threatened species
Thirteen Hongkongers accused of using false data in bungled attempts to open virtual bank accounts detained following citywide raids
China’s closer ties with Hong Kong’s bond market to create ‘enormous opportunities’ for city
Hong Kong fourth wave: fine for breaking coronavirus social-distancing rules increasing to HK$5,000, half the level originally proposed
National security law has restored order in Hong Kong, but ‘mechanisms’ to guide compliance still needed, says Beijing’s top man in city
This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.