Rival or partner? Shenzhen turns 40 with busiest stock exchange eclipsing Hong Kong, Tokyo, Seoul

While about same number of companies got listed in Shenzhen and Hong Kong since 1990, IPO proceeds were 2.7 times higher in Hong Kong

Sum of Shenzhen and Hong Kong markets may be larger than value of each individual strength, adviser Neoh says

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An aerial view of Shenzhen, the richest city in southern Guangdong province and home to Tencent, Huawei and Ping An Insurance, among others. Photo: Xinhua

Published: 6:00am, 23 Sep 2020Updated: 11:04pm, 29 Oct 2020

Shenzhen turned 40 last month as a special economic zone. Fashioning itself after Silicon Valley, the mainland Chinese city is home to some of the world’s biggest companies such as Huawei Technology, Tencent Holdings and Ping An Insurance.

Its financial sector has more to celebrate as the Shenzhen Stock Exchange approaches 30 in December. Some 670 billion yuan (US$98.9 billion) worth of stocks change hands on average every day this year, making it the busiest bourse in Asia.

Since its inception in December 1990, some 2,339 companies have raised US$193.4 billion from initial public offerings (IPOs), according to Refinitiv. ChiNext, its board of start-ups, has been on a tear as its capitalisation surged to a third of Shenzhen exchange’s total.

With Hong Kong’s future clouded by political and economic crises, is the mainland city north of the border a worthy rival? Or does its future lie as a partner in the biggest scheme of things?

“The two exchanges are competitors if you look at listings as a zero-sum game,” said Anthony Neoh, an adviser to the Shenzhen Stock Exchange on its strategic development. “However, there is much differentiation in the two markets because the Hong Kong market is not encumbered at all by currency restrictions and has a more friendly tax regime for investors.”