HK financial markets show great resilience, for now

November 15, 2019 08:47
Hong Kong is managing to lure some high-profile stock offering deals despite the months-long social unrest in the city. Photo: Reuters

Chinese e-commerce giant Alibaba is working toward a secondary listing in Hong Kong, aiming to make a debut on the local bourse as soon as Nov. 26. If things go without a hitch, the deal could represent the biggest share sale in Hong Kong in nearly a decade.

Alibaba announced Friday the offering of 500 million new shares, priced at up to HK$188 per unit. Shares will trade under the stock code “9988”, in board lots of 100 shares each.

The listing marks a vote of confidence in Hong Kong’s financial markets, as it comes despite months of social unrest in the city.

Office workers in Central may be getting jittery as they see street battles between the police and protestors, but the conflicts and violence don't seem to have shaken the faith of overseas investors and companies too much in Hong Kong and its status as a key financial hub.

As long as there is a good internet connection and free information flow, what happens in the physical world does not appear to matter much to deal arrangers and traders.

Hong Kong stock exchange and most financial organizations have already got emergency plans in place. By using multiple data centers and backup systems scattered across the city, most of the jobs can be done from home to keep the operations going in the face of crisis.

Instead of working from the central business district, bankers and lawyers can always talk to their clients from somewhere else.

At the moment, advantages like free capital flows still can only be found in Hong Kong, and not in mainland financial centers like Shanghai and Shenzhen.

Also, compared to Western markets, Hong Kong investors are more receptive to mainland companies, which account for the biggest source of IPOs here.

That is why despite the unrest and chaos, Hong Kong continues to attract major deals like the Alibaba listing.

That being said, the increasing danger and hassle of doing business in Hong Kong, as well as the failure of the local administration to put things back under control, raises the risk of the city's appeal getting eroded eventually.

This article appeared in the Hong Kong Economic Journal on Nov 13

Translation by Julie Zhu with additional reporting

[Chinese version 中文版]

– Contact us at [email protected]


Hong Kong Economic Journal columnist