HK Exchange Chief Predicts Chinese Listings Flood After Clampdowns

• Hong Kong ranks third for IPOs this year so far, behind Nasdaq and NYSE

• Onslaught by Beijing’s rule-makers will boost territory’s allure, say investors

The Hong Kong bourse is already fielding a surge in inquiries from Chinese companies looking to list their shares on the exchange due to regulatory changes on the mainland and in the United States, its new head said on Wednesday.

China said last month it would step up supervision of its firms listed offshore and require any company with data for more than 1 million users to undergo a security review before listing shares overseas.

The US Securities and Exchange Commission also said last month that Chinese companies could not raise money in the US unless they fully explained their legal structures and disclosed the risk of Beijing interfering in their businesses.

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“As a result of the news there has been significantly more inquiries about listing in Hong Kong,” Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing (HKEX), told reporters.

“However we don’t want to be in a competitive, cannibalising situation with different markets, we think that all markets can complement each other,” Aguzin added, speaking after the bourse operator posted a 26% rise in first-half profit on Wednesday.

Hong Kong ranked third for initial public offerings in the first half of the year, behind the Nasdaq and the NYSE, according to Refinitiv data, with 48 companies raising a total of $30.2 billion via both IPOs and secondary listings in the period.

Investment bankers have said the regulatory clampdown in China will further boost Hong Kong’s allure as a fundraising venue for Chinese companies looking to avoid the new restrictions for listing in the US.

MARKET VOLATILITY

HKEX’s first-half profit was HK$6.61 billion ($849.39 million), compared with HK$5.23 billion a year earlier, thanks to higher trading volumes due to a string of listings on the bourse by large Chinese companies and high market volatility.

Aguzin said trading volumes had been high in recent weeks as markets had been “very jittery” due to the unprecedented regulatory crackdown in mainland China, which has affected sectors from technology to property to education.

While this was positive for trading volumes on the exchange, he said: “What we want for the medium and long-term is a stable environment. As some of this news is settled, I believe markets will return to normality.”