Opinion | Why Hong Kong’s era as a global financial centre is far from over

While sceptics argue that Hong Kong’s stock market is overwhelmingly Chinese in character, the various stock and bond connect schemes between Hong Kong and the mainland ensure the global orientation of the city’s financial sector

The Greater Bay Area will consolidate Hong Kong’s role as the region’s financial hub

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Star Ferries cross Victoria Harbour flanked by the skyscrapers that make up Hong Kong’s financial district in December 2019. Photo: May Tse

Published: 11:45am, 27 Sep 2020Updated: 12:16pm, 27 Sep 2020

Rumours have it that rival cities such as Singapore and Tokyo are trying to lure talent and capital away from Hong Kong’s financial industry following the passage of the national security law. Some even argue that as economic and financial integration between Hong Kong and mainland quickens, the city’s role as an international financial centre will diminish and it will become solely a financial hub for the mainland.

However, in light of the horde of US-listed mainland enterprises lining up for secondary listings on Hong Kong stock market, I beg to differ. The influx of Chinese companies seeking initial public offerings in Hong Kong made the Hong Kong exchange the world’s largest bourse in terms of market capitalisation in June.

First, since the late 1990s, Hong Kong’s stock exchange has been a destination for mainland IPOs. It is true that currently there are only a few overseas companies listed on the Hong Kong exchange, apart from world-renowned brands such as Samsonite, Prada, L’Occitane and Budweiser. But as of August, more than half of the companies listed on the exchange were from the mainland, with nearly 80 per cent of the bourse’s total market capitalisation accounted for by nearly 1,300 China-oriented enterprises.

In addition, the fundamentals that makes our city an appealing financial hub will remain strong despite the Covid-19 pandemic – an open capital market, pro-business environment with an effective regulatory framework, a reliable legal system based on common law, preferential access and proximity to the Chinese market, excellent infrastructure and more.

While sceptics may counter that Hong Kong’s stock market is overwhelmingly Chinese in character, the various stock and bond connect schemes between Hong Kong and the mainland ensure the global orientation of Hong Kong’s financial sector because international investors cannot resist the opportunity to invest in the lucrative Chinese markets through these unique arrangements.