HONG KONG, Sept. 9 (Xinhua) – As one of the world's largest initial public offering (IPO) markets, Hong Kong is currently the world's second largest biotech fundraising center, and may become the world's largest biotech fundraising center in the next 5 to 10 years.
-- Rapid development of the biotech sector amid epidemic
On September 7, Innovent Biologics, Inc. (Innovent Bio; 01801.HK) was included in the scope of Southbound Stock Connect, and Innovent Bio rose about 16 percent in early trading, that biotech stocks are favored by Chinese mainland investors. The good performance of Innovent Bio's stock price is just a microcosm of the performance of Hong Kong-listed biotech companies this year.
As of the end of August 2020, 20 non-income-making biotech companies have been listed in Hong Kong and raised 48 billion Hong Kong dollars through IPOs.
Bao Haijie, head of the global listing services department of Hong Kong Exchanges and Clearing Limited (HKEX), said that the continued support of the market for the sector can be seen from the scale of financing, market capitalization growth and stock price performance of biotech companies in Hong Kong. The Hang Seng Indexes Company Limited also launched a biotech index in 2019 to track the performance of biotech companies, which enriches the biotech financing ecosystem in Hong Kong.
At the same time, the HKEX launched MSCI-related futures which also benefited biotech companies helped attract investors from different regions and improve liquidity.
-- Continuous innovation supports Hong Kong to build a biotech financing hub
The largest listing system reform carried out by the HKEX for 25 years came into effect on April 30, 2018, facilitating the listing of innovative companies with different voting rights structure and non-income-making biotech companies in Hong Kong. The biotech sector developed rapidly after the reform of the HKEX's listing system in 2018.
Biotech companies and market participants believe that the major innovations of the HKEX have opened up a new horizon for biotech financing.
Zhang Lei, founder and CEO of Hillhouse Capital, believes that the HKEX's listing system innovation connects the capital market with biotech companies, and also provides a stage for more biotech companies and scientists to showcase, and it has great social significance.
CanSino Biologics Inc. (CanSinoBio; 688185.SH; 06185.HK) is a vaccine research and development and production company. It went public in Hong Kong in 2019. Since this year, price of its Hong Kong-listed stocks has risen more than 5 times.
Wang Jing, chief financial officer of CanSinoBio, believes that the HKEX's listing system innovation has opened a path for biotech companies in the capital market, enabling these listed companies to demonstrate their own value in the COVID-19 epidemic and also allowing the Hong Kong capital to play the ecological effect.
Wang Jing thinks it is very fortunate to be listed in Hong Kong, and it is one of the best places to choose. In the process of listing in Hong Kong, the company has also been tested and prompted by global investors.
-- From private equity to the general public, the biotech sector attracts all kinds of investors around the world
HKEX chief executive Li Xiaojia said at the Biotech Summit 2020 that Hong Kong is now the world's second largest biotech funding center, and is expected to become the world's largest biotech funding centerin the following five to ten years,.
Li Xiaojia believes that China has a population of 1.4 billion, and the speed of aging is accelerating, which leads to continuously rising medical costs. Chinese scientists have a good soil for studying biotech. The research level of scientists in the field of biotech in China leads the world, and the breakthroughs and innovations of Chinese scientists will bring benefits to the world.
Bao Haijie said that the current Hong Kong biotech sector has attracted investment from overseas investors and is already an international sector. It is believed that more and more overseas issuers will be attracted in the future.
Yao Jiaren, market director of HKEX said that seeing the rapid development of the Hong Kong biotech sector in the past 2 years, many biotech companies in Israel, Europe and other places have shown interest in the Hong Kong market.
According to Zhang Lei, it takes 10 to 20 years for biotech companies to make objective profits on average and requires long-term value investment.
Previously, biotech investment was only a game for a few professional investors, but the reform of HKEX's listing system has allowed more ordinary investors to share the growth of biotech companies. Many ordinary investors can also invest in biotech companies through IPOs on HKEX and secondary market transactions. (Contributed by Li Binbin & edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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