The Hong Kong government came to the defence of the Hong Kong stock exchange after US President Donald Trump said that investors would prefer raising funds elsewhere as the city’s special status was revoked. The government said the Hong Kong exchange would continue to be the fundraising destination of choice for companies and attract more investors, pointing out that it was the world's largest initial public offering market in seven of the past 11 years. As of July this year, IPOs in Hong Kong reached HK$132.1 billion (US$17.04 billion), while average daily turnover stood at HK$124.8 billion, an increase of more than 40 per cent from the average daily turnover last year. “This fully demonstrates the recognition and confidence of international participants in Hong Kong's financial system,” the Financial Services and the Treasury Bureau said in a statement on Thursday evening. Funds raised through IPOs on Nasdaq and the New York Stock Exchange reached a combined US$22.3 billion in the first half. In an interview with Fox News on Wednesday, Trump said ending Hong Kong’s free-trade status with the US would shift the focus of companies and investors to US exchanges. “For freedom, we gave them tremendous incentives … they took massive business away from the New York Stock Exchange, Nasdaq, all of our exchanges,” Trump said. “We've now taken that all back, Hong Kong will not be a successful exchange anymore … we're going to make a lot more money now.” Hong Kong stocks slip as US expands its Internet security campaign to ‘untrusted’ Chinese apps; Tencent slides Louis Tse Ming-kwong, managing director of VC Asset Management in Hong Kong, said it was unclear to him as to what exactly Trump meant. “We don't know if he is going to impose a law that will stop money coming to Hong Kong. It's ambiguous. The point is people go where they get a reasonable return,” Tse said. In July, Trump signed a law that would punish foreign individuals and banks for “materially contributing” to any failure by the Chinese government to live up to its obligations under a Sino-British agreement signed in 1984 that guarantees a high degree of autonomy to the city at least until 2047. The legislation was introduced as a response to Beijing’s national security law that was tailor-made for Hong Kong, a measure that is widely perceived as eroding the city’s freedoms. Trump’s latest statement is significant given that if the proposed Holding Foreign Companies Accountable Act is enacted into law, any foreign company, including Chinese, would be required to hand over audits for US inspection or face delisting if it failed to do so for three straight years. It will potentially put US$1.3 trillion of US-listed Chinese firms at risk, as it will require audit inspection of companies – something that Beijing has opposed for decades. If the law is passed, Chinese companies are likely to seek stock relisting in Hong Kong, but any restriction on American capital coming to the city will obviously hurt mainland firms' ability to raise fresh capital. Tech giants and Nasdaq-listed JD.com, and NetEase were just among the mainland companies that completed a secondary listing in Hong Kong recently.