Hang Seng Index soars to record, as new listing rules chart bourse’s path back to top of IPO markets

PUBLISHED : Monday, 15 January, 2018, 9:45am
UPDATED : Monday, 15 January, 2018, 10:58pm

Hong Kong’s benchmark stock index soared at Monday’s open to a historical high before paring gains, propelled by gains among banks and finance-related companies, after the founder of the world’s largest e-commerce shopping platform said he would consider listing the shares of Alibaba Group Holding on the local bourse.

The Hang Seng Index opened 1 per cent higher at 31,702.56. This broke the historical closing record of 31,638.22 set on October 30, 2007, although it is still shy of the intraday record of 31,958.41 set on the same day.

The index slid into negative territory in the final hour of trading, before closing the day lower at 31,338.87, down 0.2 per cent from the previous close.

Tencent dragged on the index, falling 2 per cent to close at HK$433.2 after briefly touching an all-time high of HK$448.8.

Jack Ma Yun, founder and chairman of Alibaba, which also owns the South China Morning Post , last week told Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor that he would consider listing his company’s shares in the city’s bourse.

Ma’s response, after the local stock market operator and regulator pushed through an overhaul of listing regulations last year to attract technology companies and biotechnology firms to raise capital, was good news for the local bourse, as Alibaba’s US$25 billion initial public offering (IPO) in New York still holds the world record for stock sales.

A dual listing by Alibaba in Hong Kong would bolster the turnover of the local bourse, as the company’s daily turnover amounts to about 30 per cent of the Hong Kong stock exchange’s entire market volume. The larger a stock market’s turnover, the more attractive it becomes for other companies to raise capital.

Perhaps a further boost to the market sentiment was the latest news that Lufax, a unit of Ping An Insurance Group, is coming to the Hong Kong market for a flotation.

The online wealth management platform is aiming to list in April and looking for a valuation of US$60 billion, which would make it the city’s biggest fintech offering.

Hong Kong was surpassed last year by New York and Shanghai as the world’s largest destination for IPOs. The stock market operator and regulator pushed through an overhaul of the exchange’s listing regulations last year to make Hong Kong a more attractive destination for so-called new economy companies and biotechnology researchers to raise capital.

Will a fintech IPO in April help Hong Kong regain its market mojo?

Shares of the Hong Kong Exchanges & Clearing Limited, the operator of the bourse, had risen 20 per cent since the overhaul of listing rules was announced, the fifth best performer on the Hang Seng Index year to date.