Strategic advantages on show in Hong Kong Stock Exchange

August 29, 2023 | 20:00
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Positioned as Asia’s premier initial public offering hub, the Hong Kong Stock Exchange (HKEX) offers unparalleled access to vast capital resources. Christina Bao, co-head of Sales and Marketing at HKEX, discussed the opportunities and strategic advantages it extends to enterprises with VIR’s Luu Huong.

Why is the HKEX an optimal choice for Southeast Asian companies?

Strategic advantages on show in Hong Kong Stock Exchange
Christina Bao, co-head of Sales and Marketing at HKEX

Over the past three decades, the HKEX has gained prominence by welcoming a multitude of businesses, from global giants to emerging stars. As of now, the exchange boasts a vast portfolio with over 150 international companies and an impressive array of more than 2,000 Chinese firms. Such diversity ensures a robust ecosystem, promoting liquidity and offering a range of choices to potential listees.

This is not just about numbers. Financially, Hong Kong has solidified its reputation as a leader in initial public offering (IPO) fundraising, consistently securing a high global rank in the past decade.

The HKEX stands as Asia’s premier international IPO and biotech pre-revenue fundraising hub, with 65 per cent of its 2022 capital coming from new economy and biotech firms and about 100 ASEAN companies listed.

The strategic position of Hong Kong serves as a regional linchpin. Companies from Southeast Asia will find that the investor base here is finely attuned to the nuances of Asian business models and their growth prospects, providing a more informed and receptive audience.

How is the HKEX’s engagement with Vietnamese companies shaping up?

Our engagement trajectory in Vietnam is on an upward curve, even though specifics on deals are still under wraps. What we’ve distinctly conveyed to our prospects is the strategic leverage they stand to gain with a Hong Kong listing.

Listing here not only offers Vietnamese companies a platform with both Asian and global prominence but also provides an avenue for Vietnamese investors aiming to diversify internationally.

It’s clear that Vietnam is on a path of progressive economic development, and as they grapple with aligning local practices to global standards, our role is to offer the strategic advantages of Hong Kong’s market. This isn’t just about aligning with global benchmarks; it’s also about facilitating Vietnamese investors who, with time, might look outward.

Vietnam has showcased rapid GDP growth and plays a significant role in the global supply chain. The country is also transitioning from manufacturing to technology and innovation sectors. Both local and overseas capital markets will be vital in supporting this growth. Leveraging overseas markets can help Vietnamese firms optimise their capital structure, achieve cost efficiencies, and align with global practices.

The journey towards being recognised on a global stage involves consistent efforts in policymaking and. However, patience is key, as substantial economic transformations don’t occur overnight.

Given Vietnam’s strict listing policies for companies with consecutive losses, how does the HKEX framework cater to innovative but not yet profitable companies?

Hong Kong’s future-forward vision aligns well with sectors like biotech and healthcare. Our unique “Chapter 18A,” introduced around five years ago, addresses the specific needs of pre-revenue biotech firms.

We acknowledge the capital-intensive nature of drug development, and through this initiative, we have assisted almost 60 biotech firms in raising over $12.75 billion. This support not only propels research and development but also drives potential breakthroughs beneficial to global society. Our strategies have empowered over 110 healthcare companies in their fundraising endeavours.

In March, we launched a new listing chapter for Specialist Technology Companies, reaffirming our commitment to new economy businesses globally, including in ASEAN.

Comparatively, while Vietnam poses challenges for companies reporting losses over consecutive years, our approach in Hong Kong strikes a balance. We ensure that companies listing under Chapter 18A in the biotech sector meet certain criteria, such as having a drug ready for Phase 2 post a successful Phase 1 trial. This ensures we facilitate only those with tangible potential.

Our goal is not just about listings, but about building a vibrant marketplace that nurtures sectors across the spectrum, from traditional consumer goods to industries like e-commerce and AI. With this vision, we remain steadfast in championing growth while diligently upholding investor protection.

Could you shed some light on the post-IPO performance of ASEAN companies listed in Hong Kong?

While numerous ASEAN companies have chosen to list in Hong Kong, each company embarks on its own unique journey. Some flourish, while others inevitably face hurdles – a natural phenomenon in any market. An efficient market does not always ensure that every company gets the same valuation. It’s determined by the company’s merit, potential, and performance.

As for the ASEAN’s potential, I am forward-looking. A short while ago, the term “unicorn” was unheard of in this area, but now they are multiplying at an astonishing rate. The evolving landscape, marked burgeoning GDP, a youthful demographic, tech innovations, and an adaptable community, captures our attention. Achieving true greatness entails pioneering novel routes rather than merely echoing past achievements.

By Luu Huong

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