LAI SEE
Lai See
by

Can Hong Kong be the world's biggest mining finance market?

PUBLISHED : Friday, 28 March, 2014, 1:35am
UPDATED : Friday, 28 March, 2014, 1:35am

Three years ago, Robert Friedland, executive chairman and founder of Ivanhoe Mines, told the Hong Kong Mines and Money conference: "Hong Kong will become the largest mining finance market in the world." Four years on this clearly hasn't happened, which has led some to wonder if it ever will.

So was this just bull market talk or is there something in it? Naturally the stock exchange would like this to be true. However, it now costs about three times more to list in Hong Kong than it does in Toronto or Sydney. Despite the higher price, the quality of the listings is not necessarily better. In any case the Hong Kong rules as they exist make it difficult for junior miners to list. Most of the mining firms listed in Hong Kong are big state-owned companies from mainland China while there is little trading in large overseas-listed companies like Glencore and Vale.

Despite its lack of success in attracting much in the way of mining capital in recent years, a PwC report written in February 2012 says: "We believe London, and increasingly, but not in the short term, Hong Kong will be the main global finance hubs for major resource companies." Others point out that there isn't the breadth of investors in Hong Kong that you get in the other main mining capital centres like Sydney, Toronto, and London which comes from financing early-stage miners, which requires greater expertise to analyse. Hong Kong's advantage is that there is a lot of capital here and it is next to mainland China, the world's largest consumer of metals. The mainland is also one of the biggest sources of outbound investment in the sector, which can benefit Hong Kong.

Friedland stands by his original forecast, but he qualified it the other night during a talk at the Asia Mining Club when he said: "I didn't say when it would happen." He added: "Hong Kong is a very important market but is still determined by what happens on the mainland. I still think Hong Kong is very well located and will ultimately become a major centre for mining financing." Maybe the next bull market will be an interesting test of this view.

 

Mon Dieu

We gather there is some disquiet among BNP Paribas bankers who work overseas over their pensions. Large numbers of them have flocked overseas to earn higher salaries than they can hope for in Paris. However, as eFinancialCareers reports, the newspaper Liberation has discovered that some nine years ago BNP slipped a new clause into its overseas contracts giving the bank the option of accruing retirement benefits for its employees based upon salaries they would have received had they been working in France, rather than what they actually receive in their overseas posts. Unfortunately not everyone appears to have known that, and the news has been received with considerable chagrin.

But BNP's foreign legion of bankers are not taking this lying down, and a group of 10 former very senior bankers are apparently challenging BNP's right to downsize their pensions in this way. If they succeed Liberation seems to think others will follow.

 

Dream on

We are grateful to the website Here Is The City for the following collection of famous quotations about life and work. "Choose a job you love, and you will never have to work a day in your life" - Confucius; "I'd rather be a failure at something I love, than a success at something I hate" - George Burns; "Nothing will work unless you do" - Maya Angelou; "Winning isn't everything, but wanting to win is" - Vince Lombardi; "I love deadlines. I love the whooshing noise they make as they go by" - Douglas Adams; "In order to succeed, your desire for success should be greater than your fear of failure" - Bill Cosby; "Some women choose to follow men, and some women choose to follow their dreams. If you're wondering which way to go, remember that your career will never wake up and tell you that it doesn't love you anymore" - Lady Gaga; "The brain is a wonderful organ; it starts working the moment you get up in the morning and does not stop until you get into the office" - Robert Frost; "The only person you are destined to become is the person you decide to be" - Ralph Waldo Emerson; "I always arrive late at the office, but I make up for it by leaving early" - Charles Lamb; and, "Dreaming, after all, is a form of planning" - Gloria Steinem.

 

Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com

business-article-page