Hainan, China’s Hawaii, to use Hong Kong as gateway for fundraising, IPOs

Hong Kong will lend its expertise in fields ranging from tourism to trade and help companies from the Chinese province with IPOs and fundraising in the city

PUBLISHED : Tuesday, 24 April, 2018, 3:33pm
UPDATED : Tuesday, 24 April, 2018, 11:53pm

Hainan, the southernmost Chinese island that Beijing plans to transform into a hub for gambling and foreign investments, aims to strengthen ties with Hong Kong in 10 areas such as setting up a pilot district to boost trade services and help companies with their initial public offerings and fundraising activities in the city.

The move by Hainan and Hong Kong is aimed to “expand the scope of Hainan’s opening-up and give full play to Hainan and Hong Kong’s comparative advantages”, Hainan Development and Reform Commission (HDRC), the region’s top economic planner, said on its website.

The plan has been approved by both governments, HDRC added.

The Hong Kong government, however, is yet to release a statement.

The Post was still awaiting a response from the Hong Kong government regarding the tie-up.

The move comes close on the heels of President Xi Jinping’s announcement earlier this month that Beijing will build Hainan, which has long been called China’s Hawaii, into a pilot international free-trade zone and permit horse racing and sports lotteries on the tropical island.

How Hainan became the Hawaii of the East – and other such nicknames explained

The policy, which Xi said marks an important effort by China to deepen its reforms and opening up of its economy, has already propelled a rally in stocks linked to Hainan on Hong Kong and Chinese markets, including tollway, port and airport operators, tourism companies, and online lottery ticket sellers.

Ben Kwong, head of research and executive director at KGI Asia, a Hong Kong-based brokerage, said it will bring more business opportunities for Hong Kong companies and investors in the long term by allowing Hong Kong to better participate in the growth of Hainan as an international free trade zone.

Hong Kong is in a unique position to benefit from China’s deepening reforms and opening-up. I think the city’s economy will benefit in the long term, although short-term gains may not be that obvious.”

On Tuesday, stocks linked to Hainan extended recent gains.

Shanghai-listed HNA Innovation, which develops and operates tourist resorts, jumped 4.9 per cent to close at 5.55 yuan on Tuesday. Hainan Shuangcheng Pharmaceuticals climbed 4.3 per cent to 6.59 yuan. Hainan Drinda Automotive Trim gained 2.6 per cent to 21.93 yuan. Hong Kong-traded HNA Infrastructure rose 3.6 per cent to HK$10.46.

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In tourism, Hong Kong has agreed to cooperate with the Chinese province to build it into an international tourism centre and promote Hainan’s appeal to visitors, particularly among Asian cruise lines.

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In economics and trade, Hong Kong will seek to build a “cooperation zone” on the island for closer ties in trade services. Hainan’s government will also back local firms’ efforts to use Hong Kong as a stepping stone to go global and encourage them to use the city’s bourse for potential IPOs and bond issuances or to seek bank loans.

In medical services, Hainan will give licences to Hong Kong’s hospitals and professionals to operate in the Hainan Boao Lecheng International Medical Tourism Pilot Zone, China’s first, to draw overseas patients to seek treatment here.

Ronald Wan, chief executive at Partners Capital International, said Hong Kong’s tourism agencies and medical centres will gain from the proposed tie-up. “However, it remains to be seen how companies from Hainan plan to tap the capital markets in the city. This will be clear only when the details are announced.”

Other fields include conferences and exhibitions, culture and sports, student exchange and youth education programmes, research and development in technology and innovation, anti-terrorism and public security, as well as meteorology.