Hong Kong will attract listings by international companies, not just Chinese firms, as Greater Bay Area opens up, outgoing IPO panel chief says
Hong Kong will continue to attract listings by international and Asian companies in the coming years, as the 2018 reforms and a soon to be launched wealth management connect scheme increase access to and capital flows from the Greater Bay Area, said Andrew Weir, who steps down as chairman of the Listing Committee this week.
The 28-member committee acts as an independent administrative decision maker and an advisory body for Hong Kong Exchanges and Clearing, the local bourse operator. Weir, 55, regional senior partner of Hong Kong and vice-chairman, China at accounting firm KPMG, is retiring after serving a maximum six years with the committee, three of them as chairman.
Weir maintained a positive outlook despite the fact that Hong Kong was facing its worst economic slump in decades, as well as Beijing's National Security Law for the city, which has sparked concern about Hong Kong's future as an international financial centre.
"The future of Hong Kong's stock market is not only to act as a fundraising hub for Chinese companies, but it will also attract international companies, including those from the Asean [Association of Southeast Asian Nations] countries," he said in an interview.
"They come for access to a deep pool of capital and market expertise, and Hong Kong's proven track record. The stock and bond connect schemes and the introduction of the wealth management connect under the Greater Bay Area project " all are positive in bringing major capital inflows to the market."
Andrew Weir retires as chairman of the Listing Committee this week. He is regional senior partner of Hong Kong and vice-chairman, China at accounting firm KPMG. Photo: Sam Tsang alt=Andrew Weir retires as chairman of the Listing Committee this week. He is regional senior partner of Hong Kong and vice-chairman, China at accounting firm KPMG. Photo: Sam Tsang
About 80 companies from Asean countries have launched initial public offerings in Hong Kong since 2010, raising US$2.85 billion, according to Refinitiv data. The city has been the world's largest IPO market seventh times over the past 11 years, but in the first half of this year, it was behind Shanghai and Nasdaq.
Weir, however, believes it can catch up. "Hong Kong will be a natural base for listings of fast-expanding companies in the Greater Bay Area looking to internationalise their brand and reputation, as the city is a capital hub with access to international investors. There are a lot of technology, health care, high-end manufacturing, property, logistics and education companies [that are] potential candidates to list in Hong Kong," he said.
Beijing's National Security Law has drawn the threat of sanctions from the United States, but Weir did not think the law would significantly hurt Hong Kong's capital market. "The IPO market is currently holding up well and, unless there is a dramatic change in the landscape, I would expect this to continue," he said.
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Weir said he expected more US-listed mainland Chinese companies to launch secondary listings, or even relocate primary flotations, to Hong Kong amid mounting tensions between Washington and Beijing.
Such listings, of course, were made possible with the reforms carried out in 2018, a process the Listing Committee was heavily involved in. The reforms allow dual-class shareholdings companies and pre-revenue biotechnology firms to list in Hong Kong. They also introduced a framework for companies listed in the US and elsewhere to launch secondary listings in the city.
The committee has also focused on quality during Weir's tenure. Last year, it rejected more than 20 IPO applicants. "It is important to safeguard the interests of investors and to drive the quality of companies" listing, so that international investors continue to remain confident about Hong Kong as an international fundraising hub, he said.
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A British chartered accountant, Weir has lived in Hong Kong since 1991. He is widely expected to be replaced by Peter Brien, the committee's deputy chairman. Brien is a senior partner at law firm Slaughter and May.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
