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Titans clash on future role of Hong Kong as financial hub in Greater China
15 January 2013
Category:
News, China, Hong Kong
By Toby Garrod
China’s 12th five-year plan places Hong Kong at the centre of China’s financial markets. However, market leaders in the special administrative region hold conflicting views on the sustainability of this role. While consensus remains that Hong Kong will be a crucial centre of the Chinese financial system for the long-term, conflicting views are emerging regarding Hong Kong’s future role as a destination for fund-raising for mainland Chinese companies.
Such doubts fly in the face of the current wave of companies shifting from China’s B-share index to the H-share index in Hong Kong, as they seek the security of Hong Kong’s established global equity market and flee China’s experiment to combine the A- and B-share markets. As Chinese firms become increasingly international, however, the region’s capacity to compete against international destinations, such as New York and London, is coming under fire.
“I think Hong Kong is moving into a new phase of development,” says Christina Choi, senior director, policy, China and investment products at the Securities and Futures Commission. “We must bear in mind that all the large state-owned enterprises and businesses in the Mainland have completed their shareholding and structural reforms and have become listed in either in Hong Kong or overseas, or on the Mainland. Hong Kong now faces a new growth phase as it increasingly becomes a platform for Mainland financial institutions to develop overseas business and gain international experience, a trend that started in the early 2000s. Meanwhile, I think the growth of Hong Kong as a capital raising centre will start to decline.”
“It is important to note, however, that Hong Kong’s changing circumstances are being acknowledged in Beijing where measures will be taken to ensure the industry is properly supported as it goes through these transitions,” Ms. Choi tells Asia Asset Management at Value Partners’ China Securities Market and Valuation Conference on Wednesday (January 9).
Such views are misguided, however, says Matthew Harrison head of research and corporate development at Hong Kong Exchanges and Clearing. “Chinese companies have been coming to Hong Kong to raise capital from investors for 20 years. In contrast to Christina’s view, we believe this is going to continue indefinitely, especially if you consider the 800 companies currently waiting to list on the exchange. Hong Kong’s value proposition will remain very strong for the long term.”
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Discuss: Titans clash on future role of Hong Kong as financial hub in Greater China