Hong Kong could become world-class financing centre for innovative technology
Xiaomi Corp., a manufacturer of smart products including mobile phones, has submitted an IPO (initial public offering [of shares]) application to the Hong Kong Exchanges & Clearing Limited (HKEx), to estimatedly raise at least US$10 billion. This will be the world's largest debut since 2014 and also the first new and innovative technology firm with different share classes to be listed in Hong Kong. Hong Kong stocks with shares of the old economy as the main body are hopefully to be injected new vitality to improve its competitiveness.
As a matter of fact, the HKEx has just revised its IPO rules to allow IPOs by pre-revenue technology and biotechnology companies with a dual-class shareholding structure allowing their founders to hold a premium class of shares that has higher voting rights than normal shareholders. This is very timely for Hong Kong to ride on a wave of the IPO rush of companies of the new economy on the Mainland and all over the world.
With the innovation-drive economic development on the Mainland making noticeable progress, unicorn companies (a unicorn company is a start-up estimated to be worth US$1 billion or more) rise one after another to quickly increase to over 60, ranking No 2 in the world only next to the United States. Quite a number of these unicorn companies are qualified to go public.
Now Xiaomi Corp., as a representative of the Mainland's unicorn firms, beats others to launching IPO in Hong Kong. This could help Hong Kong to make a name for itself and attract more IPOs of companies of the new economy in future, pushing Hong Kong to become a world-class financing centre for innovative technology.
Hong Kong stock market has entered a new era. In addition to luring unicorn companies all over the world including those on the Mainland to sell equity and raise funds in Hong Kong, Hong Kong could also strive to win a number of Mainland technology and Internet giants listed in New York Stock Exchange and the Nasdaq Stock Market to make second listing in Hong Kong stock market, such as the Alibaba Group that once considered to be listed in Hong Kong four years ago.
What is worthy of attention is that, there has happened the incident of ZTE and Huawei being suppressed by U.S. authorities, which is bound to prompt Mainland's technology and Internet enterprises listed in U.S. to speed up their return to the Mainland or Hong Kong for listing. Therefore, it is extremely important for Hong Kong to improve its listing rules to attract new and innovative technology firms to sell shares. This matters the sustainable development of Hong Kong's financial industry and even of the economy.
As Chief Executive Carrie Lam Cheng Yuet-ngor said yesterday, Hong Kong really can no longer rest on its laurels or sit there looking up pie in the sky, but must consolidate and upgrade Hong Kong's advantageous industries. HKEx timely gives green light for IPOs of companies with a dual-class shareholding structure while making efforts to ensure that protection of investors is not affected. This is no doubt a proactive and initiative move.
In fact, it is of great significance for HKEx to introduce in such companies of the new economy with a dual-class shareholding structure as Xiaomi for listing. First of all, this will strengthen Hong Kong's status as Mainland enterprises' first choice for overseas listing. Secondly, this will help build Hong Kong into a financing centre for innovative technology firms, as a coordinative move in developing the Guangdong-Hong Kong-Macao Bay Area into a global innovation hub.
Listing rules must advance with the times, not only to meet the needs of market development but also to enable Hong Kong's financial industry to play an important role in promoting economic development in the Guangdong-Hong Kong-Macao Bay Area. Hong Kong's financial industry has noticeable advantages in cities in the Bay Area. In addition to be a listing and fund-raising centre, Hong Kong has the potentials to become a centre of green finance, a corporate treasury centre and a risk management centre.
Hong Kong's financial industry is very promising in the Guangdong-Hong Kong-Macao Bay Area development. Its development can hopefully be upgraded toward a high added-value and multi-functional international financial hub. But for Hong Kong, the most important thing is to be proactive and endeavouring, daring to innovate and make change. After optimising the listing rules, the next step could study how to promote and facilitate cross-boundary capital flow. An example if cross-boundary mobile payment arrangement in the Guangdong-Hong Kong-Macao Bay Area for Hong Kong residents. At the same time, with the Mainland reforming and opening up its financial sector, Hong Kong should strive to pilot and test-run financial opening measures in the Guangdong-Hong Kong-Macao Bay Area, so as to bring into full play advantages of Hong Kong's financial industry.
04 May 2018
