Across The Border | HK can become Belt and Road funding hub – but analysts warn investors that its thousands of expected projects are not guaranteed gravy trains
SFC’s more flexible listing approach – clearly an effort to attract what could be US$20 trillion worth of infrastructure projects – welcomed by industry players, but they also warn on the risks involve
The decision to ease Hong Kong listing conditions on companies involved in China’s flagship “One Belt, One Road” infrastructure-building economic initiative could prove a massive boost to the city’s standing as a fund-raising hub, according to analysts.
They also warn, however, that the levels of risk on such projects — which could be worth some US$8 trillion until 2020 – could be high, and may not be a natural fit for all investors.
The Securities and Futures Commission (SFC), the ultimate regulator for listing matters in Hong Kong, revealed the likely easing in Belt and Road-linked planned flotations last week, which will allow companies to list on the main board, even if they do not meet certain normal criteria.
Hong Kong’s international profile and reputation as a venue for capital raising puts it in an excellent position to take advantage of the opportunities presented by the Belt and Road initiative
The Belt and Road was launched by Beijing in 2013 to promote the building of railways, roads, power plants and other infrastructure projects in 60 countries from Asia to Europe to promote trade and economic growth.
“Hong Kong’s international profile and reputation as a venue for capital raising puts it in an excellent position to take advantage of the opportunities presented by the Belt and Road initiative,” said Ashley Alder, the SFC’s chief executive, announcing the policy.
Large infrastructure projects are often long-term events, meaning investors may have to factor in not making any profit from such an investment for years in some cases.
The SFC clearly understands this, and looks like excusing, for instance, the current requirement of a newly listed company to have earned a combined HK$50 million profit in the three year leading to its listings.