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Enoch Yiu

With US$28 billion in the first nine months, Hong Kong is second only to New York

Hong Kong's stock exchange has overtaken London, Europe and Japan to become the second-largest fund raiser worldwide, with new listings and share placements exceeding  US$28 billion in the first nine months of the year.

Last year, Hong Kong ranked fifth on the list. It has now surpassed London, Tokyo and Toronto, although a  big gap remains between Hong Kong and New York, which raised US$82.9 billion up to the end of  last month.

Hong Kong Exchanges and Clearing chairman Charles Lee Yeh-kwong has credited the recent surge to the increasing number of mainland companies listing.

In the 11 years since Beijing allowed mainland firms to raise equity overseas, 285  mainland companies listed in Hong Kong have raised a  HK$859 billion.

This included  $363 billion  from new listings,  $213 billion  from share placements after listing, and  $283 billion  from new share issues for mergers and acquisitions.

These achievements were highlighted by   Mr Lee to Vice-Premier Huang Ju  during a meeting on Wednesday.

'The ranking showed that Hong Kong has been the major international market for mainland companies to raise funds. Chinese companies now represent 30 per cent of our market capitalisation and the ratio is going to increase,' Mr Lee said.

'Vice-premier Huang Ju has confirmed to me that was the central government's policy to have more mainland firms to list in Hong Kong in a bid to upgrade their corporate governance standards.'

However, others  fear  this boom in listings from China may be  at the expense  of Hong Kong's corporate governance reputation. 'Quality is just as important as quantity,' said Stephen Cheung Yan-leung, professor of economics and finance at City University of Hong Kong.

A recent survey by City University  found mainland companies to have the poorest corporate governance standards compared with Hong Kong blue chips and medium-sized local firms.

'While the local market has become the fund-raising centre for mainland companies, HKEx needs to introduce measures to lift corporate governance standards of mainland firms to enhance investor protection,' Mr Cheung said.

Other exchanges have recently been seeking to capitalise on China's growing appetite  for international capital, with the London Stock Exchange  setting up an office in Hong Kong this week.

The US Nasdaq exchange is also   trying to entice more mainland firms to list on its bourse.

Mr Lee is not perturbed.  'The London Stock Exchange  only wants to compete with the  stock exchanges in the United States, not Hong Kong Exchanges and Clearing,' he said.

'Most of the mainland companies listing in the US or London are also listing in Hong Kong.'



HKEx passes London in fund-raising