Charles Li says the best is still to come, as Hong Kong bourse reclaims world’s IPO crown while more firms eye secondary listings
- Hong Kong’s role as a bridge between China and international markets, and as a fundraising hub for mainland firms, will only become stronger, says stock exchange chief executive
- Li rebuffed the view of some observers that seven months of violent social unrest has damaged the city’s international reputation beyond repair
“Going forward, China’s further rise and the continued dominance of the US could set the two nations on a collision course. Meanwhile, the disruptive power of technology could reshape the world’s economy and global society, spurring a fierce battle between these major powers for technological dominance,” Li wrote in his personal blog published on Monday.
“This increasing polarisation means that our world needs more and better connections and not fewer. As such, Hong Kong’s role as the connector between East and West will only become more vital.”
Hong Kong has been hit hard by the trade war between Beijing and Washington, and seven months of often violent anti-government protests that have pitched the economy into recession.
Many commentators have speculated in recent months that Hong Kong’s international reputation is damaged beyond repair.
“Amidst China’s rapid development, some may look at the nation’s growing wealth relative to Hong Kong’s, and the falling proportion of Hong Kong’s contribution to China’s GDP, as indicators that the city’s glory days are numbered,” Li said in his “Charles Li Direct” blog on the website of the exchange.
“However, such a conclusion is at odds when you consider Hong Kong’s unique and significant contributions to the development of China’s financial markets, and the strong likelihood that these will be further enhanced in the years ahead.”
Hong Kong’s GDP represented 27 per cent of China’s economy in 1993, but this had dropped to 2.7 per cent by 2018.
Li pointed out that foreign investment that uses Hong Kong as a route in to the mainland Chinese market represents more than 60 per cent of the total during the past decade. The percentage is the same for mainland firms investing overseas via Hong Kong.
The northbound bond connect – global investors buying Chinese bonds – introduced in 2017, has seen 3.8 trillion yuan of turnover since launch, Li added.
He warned, however, that Hong Kong could not take its role for granted, and needed to solve the social unrest currently gripping it.
“The city has yet to fully resolve some of the deep-seated political, social and economic tensions that have been building for many years. Some old, some new, some exacerbated since 1997. These are posing challenges to One Country, Two Systems, but it is only through the continued successful implementation of this framework that Hong Kong’s future success can be ensured,” he said.