Former British Colony, Hong Kong is all set to become the investment port like its south-neighbor Singapore, by liberalizing its stock exchange and attracting global investors and mainlanders.
Announcing the ambitious plan, Charles Li Xiaojia, Chief Executive of Hong Kong Exchanges and Clearing(HKEX) stated that “Hong Kong has a lot of listing companies and investment products but they are now mainly Hong Kong and mainland Chinese companies.”
Li admitted that continued lobbying in Beijing has eventually resulted in achieving the goal to expand the stock connect schemes so that mainlanders can buy and invest in international stock listed at his exchange, or invest in lucrative Initial Public Offering (IPO).
When the latest three-year plan of the island’s stock exchange will be implemented, reportedly, the region will be the primary winner.
Li shared that, “While Asia-Pacific economies are developing rapidly, the global investors have a great interest in investing in the Asia-Pacific region. But now there are not enough products to meet these demands. HKEX needs to capture these opportunities by attracting more Asia-Pacific companies and ETFs to list here.”
On the initial stages, the stock-connect scheme will start to allow mainlanders to trade in dual-class shareholdings in July. Such an opening will allow investors to own shares in companies such as Xiaomi and Meituan Dianping, a food-delivery company.
Hong Kong Stock Exchange will also be the sole entry point into mainland China for overseas investors, including a vast number of Asian South Pacific and Australian traders, thanks to the all-new policy.
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Securities and Futures Commission
As part of the exercise to build the environment, HKEX will bring in the regulatory commission – Securities and Futures Commission (SFC) – thereby allowing virtual trading access without having to be a licentiate.
Li explained it as “We need to have brokers who know these Asia-Pacific companies well to trade these firms. It will, therefore, be ideal to allow Asian brokers to have remote access to the local market.”
SFC’s presence brings some solace to companies such as Deloitte China. Its local representative Edward Au said that Deloitte China will soon offer a National Public offering. He adds that “Hong Kong stock market is the most liquid market in Asia after Japan. The stock markets of Singapore and Malaysia do not have liquidity like Hong Kong. Southeast Asian companies will like to list here. Rather, Hong Kong will find it hard to attract companies from the US or Europe to list here as their markets are very liquid.”