Will Hong Kong’s stock market roar back to life in the Year of the Dragon?

Will Hong Kong’s stock market roar back to life in the Year of the Dragon?

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Global capital rushed to Wall Street after the US Federal Reserve raised its key interest rate by five percentage points from 2022 and initial public offerings (IPOs) slowed to a trough in Hong Kong. Kong.

Much will depend on Bonnie Chan Yitingwho replaced Gucho (as Aguzin is known to her friends) on March 1 as the exchange's first female CEO.

05:39

Hong Kong stock market falls below 15,000 level, its lowest level in 15 months

Hong Kong stock market falls below 15,000 level, its lowest level in 15 months

Chan, who was HKEX's chief operating officer before her promotion, had been busy laying the groundwork with her exchange colleagues to prepare for a rebound in market sentiments and capital returns as interest rates near to go up. fall this year.
Last year, the HKEX opened the door for companies to raise funds in Hong Kong dollars or yuan through so-called double currency countersan important step to tap into the trillion yuan ($139 billion) in yuan deposits held in the city.
The stock market, which was the world's top IPO destination for seven of the last 15 years, digitized the fundraising process on a platform called FINI to reduce the settlement period from five to two days.
Fundraising revenue could more than double this year, positioning HKEX to return to the world's top five destinations. KPMG said.
He launched a platform to make it easier for asset managers to sell funds to retail investors. After being passed over in 2019 for the $29.4 billion Saudi Aramco share sale, the HKEX signed a deal last year with the Tadawul exchange in Riyadh. create shortcuts for Saudi companies to raise funds through secondary listings in Hong Kong.

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HKEX considers opening offices in US, Europe to court global listings

HKEX considers opening offices in US, Europe to court global listings

The exchange even attempted to institute uninterrupted trading during typhoons, taking the ax to a government of the 50s which declared a non-commercial recess every time the city observatory emits a number 8 signal during strong cyclones. Public consultation on the controversial plan has concluded and the HKEX is expected to announce a solution in July, before the typhoon season begins in the summer.
The central government in Beijing has also spared no effort to give Hong Kong an advantage. The city's offshore yuan fund received a 60 percent increase during a Update 2022 that turned the yuan settlement program into a permanent 800 billion yuan deal.
The Connect cross-border investment channel, which has existed for a decade between Hong Kong, Shanghai and Shenzhen, has been extended include bonds and wealth management products, in addition to stocks.

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Saudi Future Investment Institute holds first Asian conference in Hong Kong

Saudi Future Investment Institute holds first Asian conference in Hong Kong

Even now, officials are Advocate for cutting financial expenses threshold to participate in the Connect plan, which would open the floodgates for more capital to flow south to HKEX. The exchange signed an agreement with the nascent Beijing Stock Exchange last June to be listed dually in each other's market.
Without a doubt, the CEO of the stock market is not responsible for the rise or fall of the stock market. Still, all the preparations during the recent decline put the HKEX in a good position to benefit when the tide turns. HKEX reported its second best financial results in its history this year, even amid the market decline.

Chan, who wrote the document that formed the legal basis for listing reforms on the HKEX to allow dual-class shares, can draw some confidence from the story.

The Hang Seng Index has increased in each of the four dragon years of the lunar calendar since 1976, according to a Post study. Even in 2000, the lunar cycle managed to eke out a 0.5 percent gain in a market that fell 11 percent during the calendar year after the dot-com bubble burst.

60 second catch up

Deep dives

Illustration: Brian Wang

Hong Kong bankers in 'survival mode' as IPO drought ends windfall

  • “The current environment is very stressful, especially for young investment bankers,” says Jerry Chang, a consultant at Barons & Co.

  • The picture has changed considerably since last quarter, with an overall decline in hiring across the investment banking sector: Robert Walters

Hong Kong's initial public offering (IPO) market is suffering another slow start in 2024. It was once a ray of hope for retail investors seeking windfall profits and a lucrative source of fees for investment bankerscontributions have become a source of stress and job insecurity due to the decline in said activity.

This year, five companies have raised HK$2.18 billion (US$279 million) from their share offerings in the first two months, according to data compiled by the London Stock Exchange Group, the slowest boost since 2011. In China mainland, 18 IPOs generated $15.2 billion. yuan ($2.1 billion), the lowest figure since 2016 at this stage. In contrast, the US market is enjoying its best streak in three years, with 26 IPOs and $6.3 billion in profits.

Photo: Jonathan Wong

China's push into bonds and wealth products a plus for Hong Kong

  • The policies will be a boon for central bank digital currencies, such as Hong Kong's e-HKD and the mainland's e-CNY, as they get the go-ahead for simultaneous testing.

  • Another new policy known as cross-border credit referencing will allow Hong Kong and mainland banks to share credit information on companies.

Hong Kong's role as an offshore yuan trading hub will benefit from policies unveiled by the People's Bank of China to improve wealth management and the Bond Connect cross-border investment channel, according to speakers at the Asian Financial Forum (AFF).

The new policies will also benefit Hong Kong property developers as they relaxed cross-border payment rules between the 11 Greater Bay Area cities to make it easier for Hong Kong and Macau residents to purchase homes in southern China. said the head of New World Development. Chief Financial Officer Edward Lau Fu-keung.

Illustration: Ka-Kuen Lau

Hong Kong's star shines as Greater Bay Area's rich take advantage of tax breaks and incentives

  • Money flows from the Greater Bay Area have boosted Hong Kong's wealth management assets by almost 30 percent to $3.9 trillion in the five years to the end of 2022.

  • Starting February 26, the Wealth Management Connect scheme will expand for Bay Area residents with increased investment fees and fund options.

February 18 marks five years since Beijing unveiled its plan to turn the Greater Bay Area into a high-tech powerhouse by 2035. The region of more than 86 million people covers Hong Kong, Macau and nine cities. from Guangdong.

In the third of a four-part series, Enoch Yiu looks at Hong Kong's progress toward becoming the de facto wealth management center for the wealthy, and what needs to be done to stay on top.

Illustration: Henry Wong

Hong Kong IPO: This is what awaits us in 2024 after a miserable 2023

  • The Hong Kong Stock Exchange's IPO ranking fell to eighth place this year, with fundraising falling to $5.9 billion from 68 listings.

  • Analysts are confident Hong Kong can shrug off a gloomy year, pointing to a number of positive signs including potentially lower interest rates and China's political momentum.

When the Chinese baijiu manufacturer ZJLD Group grossed HK$5.31 billion (US$676.4 million) in April, few would have expected it to be Hong Kong's biggest deal. initial public offering of the year.
He crawled China Tourism Group Duty FreeThe IPO of $2.3 billion in 2022 and fell far short of the short video platform. Kuaishou TechnologyThe price of 6.2 billion dollars from the previous year. Hong Kong's IPO value fell 53.5 percent to a 20-year low of $5.9 billion from 68 listings, according to Refinitiv data. Simply put, 2023 was bleak for IPOs.
Illustration: Lau Ka-kuen

Double counter to elevate Hong Kong yuan's hub status and improve liquidity

  • The dual-currency counters will offer investors the option to trade in Hong Kong dollars or yuan and the two categories of shares will be fungible.

  • The number of yuan share class funds has almost doubled to 377 by the end of 2022 from 191 in 2018.

When veteran stockbroker Tom Chan Pak-lam first entered the securities industry in 1993, the yuan currency What he carried during his trips to China for business was strictly to spend on meals and hotels.

“Thirty years ago, international investors did not care about yuan stocks listed in Shanghai and Shenzhen,” said Chan, honorable permanent president of industry body Institute of Securities Dealers, referring to the indifference towards the undervalued currency, which was heavily linked to the dollar.

Illustration: SCMP

Does Trump want to separate Wall Street from Chinese companies?

  • Chinese companies are asking the “difficult question” of whether they should list in the US or Hong Kong

  • If the United States cannot be seen as a viable and stable counterpart, “we are going to have a competitor somewhere in the world,” says the New York University finance professor.

As the White House continues to pressure Beijing to reach a trade deal, concerns are growing that the Trump administration may try to exclude Chinese companies from U.S. capital markets.

It would mark a sea change in policy and politicize what has been one of the key principles driving massive gains in American financial markets for decades: the free flow of capital.

Global Impact is a curated weekly newsletter featuring a news topic originating in China with significant macro impact for our news readers around the world.

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