It pays Hong Kong to welcome hi-tech companies
The decision to amend stock market listing rules to allow a two-tiered share structure now has Xiaomi working on a city share sale and this will only encourage our own start-ups
As the Hong Kong stock exchange rued the one that got away, praise for honouring a principle was cold comfort for the loss of what remains the world’s biggest tech initial public offering.
We are referring of course to the US$25 billion listing of Alibaba on the New York Stock Exchange in 2014.
If this city’s regulators had been prepared to relax its one-share, one-vote rule to enable the company’s founders to retain board control, it would have been a different story.
Despite the heavy cost, this newspaper said it was the right decision not to bend the rule for Alibaba, which now owns the Post, but that did not mean the long-standing principle itself should not be reviewed and changed, as opposed to bent.
It has taken more than three years of soul-searching amid division among both regulators and officials, but the decision to amend the listing rules to allow a two-tiered share structure has borne quick fruit.
Hong Kong looks set to score its first major coup in attracting new technology listings, with mainland smartphone giant Xiaomi having briefed investment banks to work on a share sale in Hong Kong rather than New York that could raise as much as US$16.5 billion, which would be the biggest listing in the city since the US$20.4 billion initial public offering by AIA in 2010.
A lot has changed since Hong Kong paid a heavy price for refusing to abandon a fundamental principle. At that time in Asia there was limited acceptance of dual share structures.
Now Singapore is amending its rules and targeting Chinese tech companies, Shanghai is starting to catch up with Hong Kong and New York paved the way long ago. It is hard for Hong Kong to go against the trend.
It is, after all, very important to attract tech companies if the city wants to become a financial hub for China and also a hi-tech centre.
In the future the Chinese economy is increasingly going to be driven by tech companies such as Xiaomi and others. Whether it can attract these listings is critical to the city’s future and positioning as a financial hub.
With the growth of internet companies public sentiment towards them and confidence has improved. Making tech companies more welcome here is a way of encouraging our own start-ups.