Hong Kong needs third board to compete globally on tech listings

Shenzhen’s ChiNext ranked third with 23 tech firms raising HK$7.9 billion, after Nasdaq and the New York Stock Exchange

PUBLISHED : Wednesday, 25 January, 2017, 3:18pm
UPDATED : Wednesday, 25 January, 2017, 3:18pm

Hong Kong lost out to both New York’s Nasdaq and Shenzhen Stock Exchange in terms of attracting new tech listings by value, according to a new study of PwC, and the accounting giant says the city will continue to struggle to attract more unless it introduces a further specialist exchange for such companies.

The Nasdaq ranked the top tech listing venue worldwide last year with 21 firms raising HK$15.9 billion, followed by the New York Stock Exchange with four tech firm new listings worth HK$8.7 billion.

Shenzhen’s ChiNext ranked third with 23 tech firms listing raising HK$7.9 billion.

Hong Kong Exchanges and Clearing attracted just five tech firms to its main board raising HK$5.7 billion and nine Growth Enterprise Market (GEM) companies raising HK$800 million last year according to PwC.

The HKEX should launch a third board which will only allow professional investors to trade, so the listing rules should be more relaxed. It should also accept companies that have little revenue or have dual class shareholding structures
Benson Wong, PwC partner

This is despite Hong Kong remaining the largest IPO market worldwide last year after raising HK$19.4 billion, beating both New York and Shanghai. But 69 per cent of that funding was raised from financial firms with only 3 per cent from tech companies.

PwC also conducted a 20-year review of the Hong Kong IPO market which showed Tencent is the biggest tech firm to have listed here.

The GEM launched in 1999 was initially aimed at attracting technology firms, but it has only really attracted financial and retail company listings.

Benson Wong, a partner with PwC, said the GEM does not meet the needs of technology firms.

“The HKEX should launch a third board which will only allow professional investors to trade, so the listing rules should be more relaxed. It should also accept companies that have little revenue or have dual class shareholding structures,” Wong said.

HKEX chief executive Charles Li Xiaojia said last Thursday the exchange expects to launch a consultation on the launch of a third board to attract technology and new economy companies to list in Hong Kong.

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