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Xinhua Silk Road
Industry

HKEx's listing reform helps HK become financial hub for biotech and innovation

May 08, 2019


Abstract : Since the launching of a new listing system by Hong Kong Exchanges and Clearing Limited (HKEx) on April 30, 2018, an increasing number of different types of listed companies have gathered on Hong Kong's capital market and made it more diversified and dynamic.

BEIJING, May 8 (Xinhua ) -- Since the launching of a new listing system by Hong Kong Exchanges and Clearing Limited (HKEx) on April 30, 2018, an increasing number of different types of listed companies have gathered on Hong Kong's capital market and made it more diversified and dynamic. The listing reform has prompted Hong Kong to form a biotech investment ecosphere and further supported the gradual development of Hong Kong as a financial hub for biotech and innovation companies.

As the largest listing reform conducted by HKEx in nearly three decades, the reform was intended to facilitate the listing of new economic companies in Hong Kong, such as innovation companies with a structure of different voting rights and yet unprofitable biotech companies.

The inaugural year of listing reform witnesses remarkable achievements

According to data released by the HKEx, it attracted 40 new economic companies to be publicly listed in the past year. The accumulated amount of financing reached 150.4 billion HK dollars, accounting for 53 percent of Hong Kong's IPO fund-raising during this period of time. Among them, nine biotech companies raised 32.3 billion HK dollars, accounting for 11 percent of Hong Kong's IPO fund-raising; two companies with structures of different voting rights raised 75.7 billion HK dollars, accounting for 27 percent of Hong Kong's IPO fund-raising during this period of time.

Benefiting from its listing system reform, the HKEx business set a number of new records in 2018. Specifically, the amount of IPO in the Hong Kong stock market reached 288 billion HK dollars, ranking first in the world for the sixth time in the past decade. In addition, the turnover of the stock market hit a record high of over 26 trillion HK dollars.

Dr. Hu Zhanghong, CEO of Greater Bay Area Homeland Investments Limited, said that thanks to the implementation of the listing reform policy, a flock of new economic companies and biotech companies with no revenue have been listed in Hong Kong.

Su Jie, senior economic researcher of Bank of China (Hong Kong), stated that the institutional reform is an important driving force for Hong Kong to regain the global leading position in terms of IPO fund-raising in 2018. Thereby, it is certain that Hong Kong will stride towards the goal of becoming a fund-raising center for new economic enterprises in China and even the world. The reform is also conducive to build Hong Kong into an international asset management center.

The listing reform prompts Hong Kong to form a biotech investment ecosphere

In the inaugural year of the listing system reform, the HKEx attracted nine biotech companies, of which seven have made no profit yet. Many biotech companies engaged in macro- or small molecule bio-pharmaceutical industry and other biotech subdivisions, have submitted their listing applications.

Hong Kong, one of the leading financial centers in the world, is able to satisfy all the financing needs of biotech companies at different scales and on different development stages, and thus has excellent conditions to develop into a biotech hub, said Chen Maobo, Financial Secretary of the Hong Kong Special Administrative Region (SAR).

Li Xiaojia, chief executive of the HKEx, said that although the new listing mechanism was launched only one year ago, Hong Kong has become the third largest destination in the world where biotech companies get publicly listed. The listing system of biotech companies as well as the aggregation of relevant analysts, investors, listed companies and indices have all contributed to the gradual formation of the biotech investment ecosphere in Hong Kong.

Against this background, the CES HK Biotechnology Index was launched by China Exchanges Services Company Limited (CESC), a joint venture of the HKEx, Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE). It is the first index to track the biotech companies listed on the main board of the HKEx, further diversifying Hong Kong's capital market.

Compared with the capital markets in the United States and Europe, the biotech industry in Asia is still in its infancy. The new listing rules definitely help attract more outstanding biotech enterprises to be listed in Hong Kong and inject new impetus into the development of those biotech enterprises in the region.

The listing reform helps create a core financial circle for Guangdong-Hong Kong- Macao Greater Bay Area

Chinese authorities unveiled the outline development plan for the Guangdong-Hong Kong-Macao Greater Bay Area earlier this year.

According to the plan, efforts should be made to build an international financial hub in the area, give full play to Hong Kong's leading role in the financial field, consolidate and enhance Hong Kong's position as an international financial center, and promote the connectivity of financial markets step by step.

Hu said that the listing reform will help improve the HKEx's function of providing support to innovation enterprises, create a core financial circle for Guangdong, Hong Kong and Macao, enhance the connectivity of financial markets in the Greater Bay Area, facilitate the free flow of cross-border capital, and thus develop the Greater Bay Area into an international sci- tech innovation center with global influence.

E Zhihuan, chief economist of Bank of China (Hong Kong), said that the Hong Kong stock market, relying on the good industrial foundation and innovation environment of the Greater Bay Area, could attract relevant sci-tech innovation firms to be listed for fund-raising, enhance the capabilities of global resources integration and frontier sci-tech R&D, and thus push forward with the construction of an international sci-tech innovation center.

Hu also suggested that in order to maintain the appealing features of the Hong Kong market, appropriate measures designed to protect investors' interests more effectively should be put in place, such as further improving the efficient and transparent listing process and strengthening the disclosure regulations. At the same time, great efforts should be made to improve the system for promoting mergers and acquisitions of listed companies, especially those targeted to sci-tech innovation enterprises. Hopefully, Hong Kong's capital market will advance with the time, gain more competitive advantages, and become a cradle of innovation companies. (Edited by Yang Yifan, yangyifan@xinhua.org)

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Keyword: Hong Kong listing-reform

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