Hong Kong will need to create a new platform for mainland Chinese tech companies to access the global capital market for funds, rivalling efforts in bourse operators in Beijing, Shanghai and Shenzhen, according to a local industry lobby group. A new tech board akin to the Nasdaq in New York, or more flexible mainboard listing rules, would help drive China’s long-term goals of self-sufficiency and leadership in key areas such as semiconductor manufacturing and artificial intelligence, the Hong Kong Chamber of Listed Companies said. “Hong Kong is facing keen competition from the mainland exchanges,” said Catherine Leung, who chairs the chamber that represents 239 listed firms with one-third of Hong Kong’s market capitalisation. “We have to act quickly to create the ‘Nasdaq of China’, or change the [existing] listing rules to allow these companies to raise funds.” The timing is right, she added, notwithstanding the ongoing rout in some of China’s biggest tech juggernauts listed in Hong Kong. The Hang Seng Tech Index of 30 stocks has slumped 25 per cent this year, many trading below their 52-week lows, adding to a 33 per cent rout in 2021 amid an industry crackdown. Top 15 Hong Kong IPOs to keep an eye on in 2022, as the city tries to put a difficult year behind it The chamber had earlier floated the idea to Financial Secretary Paul Chan Mo-po in December in a meeting and submitted a written proposal last month preceding his Budget speech. Chan has said the city’s market regulators are reviewing the listing rules with the view of greasing such tech listings. “Mainland tech companies would like to tap international capital and promote their brands globally,” said Leung, a former JPMorgan Chase investment banker, and the first woman to lead the chamber. Tough regulations have forced start-ups to opt for Beijing, Shanghai or Shenzhen instead, she added. Mainland Chinese authorities have spared no efforts to open new funding avenues for its promising tech start-ups. They included November’s revamp of Beijing Stock Exchange, as well as the introduction of ChiNext in Shenzhen and the Star Market in Shanghai, Leung added. China tech crackdown: after a trillion-dollar rout, has the stock market drubbing gone too far? Shenzhen, dubbed the Silicon Valley of China, offers a deep pool of tech start-ups for Hong Kong. The richest city in southern Guangdong province is home to 14,400 national-level hi-tech companies, which generated 2.6 trillion yuan ($378 billion) of output in 2020. Reforms in Hong Kong’s listing regime since 2018 have paved the way for companies with multiple classes of voting rights and promising yet unprofitable biotechnology firms to conduct initial public offerings (IPOs), making it the biggest venue outside the US. Some 70 companies have made the leap by the end of January this year, raising more than HK$570 billion (US$72.8 billion) along the way or almost half of the IPO proceeds in the city during the period, according to exchange data. HKEX reforms that brought Alibaba, Meituan and Xiaomi listings to the city to be expanded Still, Leung said the changes have not gone far enough. Companies outside the biotechnology sector remain disadvantaged. They are required to meet a three-year, HK$80 million profit preceding their IPOs, the toughest track-record rule globally. “Many companies in the semiconductor, AI, robotic, cloud computing and other sectors have not yet made any profit but they do need money to support their research and development,” she added. A less onerous IPO threshold would help, she said. Nicolas Aguzin, chief executive of bourse operator Hong Kong Exchanges and Clearing, said there were 160 companies awaiting clearance as of February. The pipeline, however, has shrunk following a series of regulatory crackdown. The chamber said its proposal would also ease the path for many of the 200-odd US-listed Chinese companies that are facing delisting pressures under America’s newest law to gain audit records and inspection of these mainland-based companies. The US Securities and Exchange Commission last week listed five of them on a provisional list, asking them to show cause why they should not be delisted. Its proposal would encourage more Chinese companies that may be delisted from New York to opt for Hong Kong as their new home, Leung added.