As the U.S. threatens to have Chinese companies delisted from U.S. stock exchanges amid the prolonged China-U.S. trade war, Hong Kong Exchanges and Clearing (HKEX) is taking the opportunity to woo listings from the Chinese mainland.
"It's not a good choice for Chinese companies to seek listing in the U.S. now, as they will face high political and supervisory risks," said Chen Cong, head of China Issuer Services of HKEX, at the International Investment Forum 2019 held in Beijing on Sunday.
Amid uncertainties brought by the trade war, some Chinese companies already listed in the U.S. are seeking secondary listings in Hong Kong or the A-share market at home in a bid to create an alternative financing channel, Chen said.
Trade tensions between the U.S. and China are threatening to expand to the financial sector, highlighted by a Reuters report saying that U.S. Senator Marco Rubio plans to propose a bill to ban a federal pension fund from investing in Chinese shares.
By contrast, Hong Kong's capital market is free and highly efficient, without any limit to capital flows, Chen said.
"There is international and regional capital in Hong Kong, and mainland investors can also invest in stocks through the Shenzhen-Hong Kong Stock Connect and the Shanghai-Hong Kong Stock Connect," she said, noting that investors in the Hong Kong bourse are well-informed about the mainland market and companies.
Given months of social unrest in Hong Kong, some may be concerned as to whether the Hong Kong capital market is still attractive to investors. However, Hong Kong Financial Secretary Paul Chan Mo-po blogged on Sunday, saying that social unrest hasn't severely affected investors' confidence, as the numbers show.
The Hang Seng Index closed at 27,651 on Friday, up 2.8 percent since the end of May, while the Hong Kong dollar remains stable against the U.S. dollar, the banking system has abundant liquidity and there is no obvious outflow of capital, read the blog.
On Friday, media reports said that internet giant Alibaba plans to list in Hong Kong following Monday's Singles Day, a large online shopping spree in the mainland.
Alibaba didn't immediately reply when reached by the Global Times for comment.
"More mainland companies whose shares are traded in the U.S. may follow Alibaba's move because of increasing difficulty in raising funds for some companies and the potential U.S. crackdown," Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Sunday.
Chen said the HKEX maintains a prudent and optimistic attitude toward the Hong Kong capital market. "The amount of capital in the Hong Kong stock market is healthy and the Shenzhen-Hong Kong Stock Connect and the Shanghai-Hong Kong Stock Connect will further pump in money," she said, noting that market valuations in Hong Kong are reasonable and the bourse's IPO pipeline is abundant, especially for new-economy companies.
The number of new-economy companies seeking listings in Hong Kong has risen in recent years. Such companies accounted for about 10 percent of total IPOs about four years ago, but the proportion surged to around 50 percent in 2018, Chen said.
Mainland technology, media and telecoms companies listed in Hong Kong - represented by Tencent, Meituan Dianping and Xiaomi - have formed an excellent ecosystem, which is expected to attract more such companies to be listed in Hong Kong, she said.
Yang said more mainland companies getting listed in Hong Kong will also enhance Hong Kong's status as international finance center.
