Hong Kong’s lurch towards a bear market has not dented interest in the city as a listing hub, says HKEX chief

PUBLISHED : Friday, 07 September, 2018, 5:09pm
UPDATED : Friday, 07 September, 2018, 11:25pm

Hong Kong will keep up the drive to attract new technology companies to list shares in the city, even as the benchmark share index stands at the threshold of a bear market, having tumbled nearly 20 per cent from its high earlier this year, according to the head of the stock exchange.

“Usually when the stock market is not good, there would be a decrease in IPO activity because many listing candidates will delay their listing plans to wait for the market sentiment to improve. However, we have not seen any decline of our IPO pipeline during the recent market volatility. The number of IPOs in the pipeline remains strong,” said CEO of Hong Kong Exchanges and Clearing.

“This showed the listing candidates still have confidence in the Hong Kong market.”

Li, speaking on the sidelines of a conference at the American Chamber of Commerce on Friday, attributed the downtrending stock market to concerns over the widening trade war between China and the US.

“Globally, the economic foundation remains strong. There is no panic selling. The volatility of the market is mainly due to the anxiety of the trade war. I could not comment if this will be a short term phenomena or if it will last for a while,” Li said.

Li said that while IPO pricing was a factor in any decision to list shares, other considerations also played a role.

“These companies want to raise funds to meet their expansion plan and to enhance their competitiveness,” he said.

There are 240 outstanding IPO applications still active and pending for approval, as at the end of August this year, compared with 198 outstanding applications a year ago.

In August the HKEX reclaimed its crown as the world’s largest IPO market, surpassing New York and Nasdaq.

This came after the exchange carried out the biggest reform to its IPO rules in more than two decades, enabling the listing of technology companies with dual-class shares, as well as pre-revenue biotech companies.

The reforms helped attracted three dual-class shareholding companies so far this year, including July’s listing of mobile phone maker Xiaomi. Seven biotech companies have applied for a listing, while two have already been completed.

“It is good to see the listing reforms have removed the regulatory barriers to allow these companies to list here. Hong Kong will be a listing hub for these technology and biotech companies, so they do not need to go to the US,” Li said.