As Hong Kong exchange officials celebrate the end of a lucrative
year, a major challenge is looming the lack of behemoths ready to
list in 2007.
Hong Kong raised a record $43.8 billion in 2006, surpassing New
York to become the world's second-largest initial public offering
(IPO) market after London. But the figure would have been a lot
more modest without Bank of China and the Industrial and Commercial
Bank of China, which together raised $30 billion.
Hong Kong has been the first-choice listing destination for
mainland companies since the late 1990s. But since it has already
hosted almost all the big mainland names, it now has just a handful
of other giants to look forward to.
To maintain its position as the world's seventh-biggest bourse
it will have to cast its net wider both on the mainland and further
afield.
The Hong Kong stock exchange proposal to reform listing rules to
encourage more overseas companies to list in the city is a step in
the right direction. At present, only those registered in Hong
Kong, on the mainland, the Cayman Islands and Bermuda can do
so.
The rule change is likely to draw multinational corporations
with operations in the region. But what could really attract
overseas companies to Hong Kong are the international market and
the sound knowledge its investors have about Asia, especially
China.
Hong Kong should also try to woo the small and medium-sized
enterprises on the mainland that comprise the most active part of
the world's fourth-largest economy. These firms have been pursuing
the European and US exchanges and have the power to revitalize Hong
Kong's ailing secondary board.
Hong Kong's smaller peer, Singapore, offers a good example the
country's top officials promote it as "Asia's best exchange for
SMEs" at almost every trade and investment fair held.
Hong Kong should follow the same path.
(China Daily January 4, 2007)