White Collar | Hong Kong’s ‘primary connect’ proposal to attract international firms faces many hurdles
A proposal by Hong Kong Exchanges and Clearing to introduce a “primary connect” would upgrade Hong Kong stock listings and existing cross border trading schemes to a new level, but the suggestion faces many obstacles before it could be successfully implemented.
The new proposal announced by HKEX chief executive Charles Li Xiaojia on Thursday is part of the bourse’s wide ranging expansion plans in the coming years.
It involves getting Beijing’s approval to establish a new connect scheme whereby big overseas companies already listed in the US or other markets, such as Apple or Disney, would be invited to list in Hong Kong.
Since the companies would already be listed in other market the arrangement would not be an initial public offering, nor would it be secondary trading as they would be offering shares in the city. However, the advantage would be that mainland Chinese investors could subscribe to the share offer in Hong Kong via the stock connect platform.
This is a good concept as it means Hong Kong won’t have to rely only on mainland companies listing – the city can expand its bourse by attracting more western firms. More than half of all Hong Kong listed companies are from the mainland.
