Date
19 June 2018
The Hong Kong Stock Exchange, which is working hard to attract new-economy firms, is going to face increasing competition from its mainland counterparts. Photo: Reuters
The Hong Kong Stock Exchange, which is working hard to attract new-economy firms, is going to face increasing competition from its mainland counterparts. Photo: Reuters

Mainland exchanges posing increasing threat to HK bourse

In a bid to attract quality firms to list in China, the authorities have been pulling all the stops.

Last week, a major subsidiary of leading contract manufacturer Foxconn secured regulatory approval for a Shanghai listing.

From application to approval, it only took the company 36 days, setting a new record. Most other applicants need to wait three to four years.

The approval process has actually slowed down quite noticeably this year amid government efforts to clamp down on dubious practices of listed firms. But for quality applicants, they are apparently more than welcome.

Also, senior officials of the China Securities Regulatory Commission (CSRC), Shanghai Stock Exchange and Shenzhen Stock Exchange have said a plan will soon be unveiled to allow overseas companies to float on domestic exchanges through the Chinese depositary receipt route.

This would open up a new channel for Chinese internet giants such as Alibaba and Tencent, which are now listed outside China, to return home.

A special channel is also being planned to facilitate the listing of Chinese unicorns like DJI, Toutiao and DiDi Chuxing on the domestic market.

Some new-economy stocks had opted for overseas listing due to the limited capacity of domestic markets in the past, CSRC chairman Liu Shiyu said.

“Domestic investors didn’t get to share the benefits of their growth. That’s a pity. This should not happen again,” he added.

As China’s top policymakers have vowed to keep these star companies at home, tech firms planning initial public offerings are likely to heed the call.

As such, the Hong Kong Stock Exchange, which is also fighting hard to attract new-economy firms, is going to face increasing competition from its mainland counterparts.

The full article appeared in the Hong Kong Economic Journal on March 13

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal columnist

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