Hong Kong eyes moves to attract IPOs of mainland Chinese, Middle Eastern firms to spur stock market, Paul Chan says

The government is actively engaging with mainland Chinese regulators to speed up the approval process for companies listing in the city, finance minister says
New measures will also be rolled out to attract family offices and wealthy individuals, as well as strengthen the asset and wealth management segments

Hong Kong stock market

Jiaxing Li

Published: 6:27pm, 30 Jan 2024

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Hong Kong will encourage more companies from mainland China, Middle East and Southeast Asia to list in the city as part of the government’s initiative to revive its sluggish financial market, according to Financial Secretary Paul Chan Mo-po.

The government is actively engaging with regulatory authorities on the mainland to expedite the approval process for companies listing in Hong Kong, Chan said at the Hong Kong Capital Markets Forum on Tuesday.

The aim is to continue revitalising Hong Kong’s financial market, he said at the forum, where participants from the finance industry, government agencies and academia discuss the prospects of the city’s markets, and explore policies and methods to attract domestic and international investors.

“The focus is to attract more high-quality mainland and international companies to list and raise funds in Hong Kong.”

Financial Secretary Paul Chan addresses the Hong Kong Capital Markets Forum on Tuesday. Photo: Handout

Chan’s pledge comes hot on the heels of a string of efforts to prop up the local financial market. Last week, the People’s Bank of China unveiled six policies, including the expansion of the Bond Connect scheme, relaxing rules for cross-border payments within the Greater Bay Area and the sharing of cross-border credit information among banks, to strengthen Hong Kong’s role as a financial hub.

Hong Kong will also strengthen connectivity with mainland markets and reinforce its role as an offshore yuan hub, Chan said.

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A yuan counter will be added to the Southbound Stock Connect platform, allowing mainland investors to directly buy Hong Kong stocks using the currency.

The government will also roll out new measures to attract family offices and high-net-worth individuals, as well as bolster asset and wealth management businesses, he added.

The city’s capital market has been under pressure because of China’s economic slowdown, “higher for longer” interest rate environment and rising geopolitical tensions.

Last year, fundraising in Hong Kong fell 53.5 per cent to US$5.9 billion from 68 listings, the worst since 2003, according to Refinitiv data. That dragged Hong Kong Exchanges and Clearing’s (HKEX) main board to eighth in the global IPO table. Some 80 companies are expected to list this year, with fundraising set to exceed HK$100 billion, according to a PwC forecast.

The city’s stock market continues to struggle after an unprecedented four years of slump, as investors remained concerned about China’s “investability” because of economic challenges and geopolitical risks. A policy driven run-up quickly lost steam this week amid renewed concerns about corporate earnings and China’s economic outlook.

As Hong Kong’s capital market is highly connected to both the international and mainland markets, it has inevitably been affected and experienced some fluctuations in recent times, Chan said.

“There are challenges and opportunities in the future, and the key lies in how we grasp and utilise our unique advantages effectively,” he said.