The View | Why Hong Kong is the answer to China’s problems

The playground squabble that went for a chief executive debate mentioned little about Hong Kong being the answer to anything. But we can help China in a big way with something we are really good at: money.

The biggest chunk of money lumbering down the track at the moment is the planned listing in 2018 of what is probably the world’s biggest company, Saudi Aramco. This is neither hippo, nor elephant – it is a whale. Aramco controls the world’s biggest oil reservoir beneath Saudi Arabia and is said to be valued at a cool US$2 trillion. That makes it equivalent to the eighth largest economy in the world, after India.

Hong Kong should be proud that its stock market is in the running for this global listing. Not Beijing, not Frankfurt, not Singapore. Only London, New York, and at a pinch Tokyo can compete. Companies listing their stock want savvy invest+ors, deep and active trading, and a pipeline to lots and lots of lovely money.

Hong Kong frequently tops the global list for international public offerings and has been the choice of three out of five of the largest placements ever. The Shanghai-Hong Kong Stock Connect puts Chinese investors within reach. The listing would sit alongside those of other state-owned oil giants like CNOOC, PetroChina and Sinopec.

Saudi Aramco will initially list as much as 5 per cent of the company, which if current valuations hold true would be US$100 billion – some four times larger than Alibaba Group Holding’s record issue in 2014. In comparison, the Postal Savings Bank of China floated 15 per cent in Hong Kong last year to raise “just” US$7.4 billion.

But we’re not there yet. London has the biggest chance – it is the Middle East’s summer playground and is currently bigger than us in terms of volume traded. It is also the home of many highly seasoned petrocarbon analysts and active oil investors. New York is the main contender with the money, the depth, the technical experts and the sophistication to pull it off; but it comes with recently acquired political baggage that may bite.

Even if Hong Kong misses out, there is no shame – just to be in the top three of global stock exchanges is impressive, and we may still get a secondary listing.