Hong Kong’s Capital Market: A Bridge Between East and West
As a global financial hub, Hong Kong’s capital market is thriving as a “superconnector” between international fund managers and mainland China’s financial markets. Alibaba Group Holding’s upgraded listing status has been a game-changer, benefitting investors on both sides.
Mainland Investors Flock to Alibaba
Since joining the Stock Connect scheme in September, onshore investors have snapped up 4% of the public float in the nation’s biggest e-commerce platform operator. This surge in interest has contributed to 15% of the stock’s turnover in less than three months, according to co-founder and chairman Joe Tsai.
Dual-Primary Listing: A New Era
Alibaba’s switch to a dual-primary listing on August 28 has opened doors for mainland investors to tap into one of China’s biggest technology success stories. As the owner of Taobao, Tmall, and Alipay, Alibaba’s products and services are household names in China. Now, mainland investors can invest in the company’s stock, further bridging the gap between East and West.
Liquidity Boost
Tsai emphasized the benefits of having a primary listing in Hong Kong, citing the Stock Connect programme as a key driver of liquidity. “This brings a lot of liquidity into our stocks,” he said during a fireside chat at the Global Financial Leaders’ Investment Summit.
A Decade of Stock Connect
The Stock Connect scheme, which celebrated its 10th anniversary this week, has been instrumental in connecting mainland investors with Hong Kong-listed shares. Foreign investors can also tap into yuan-denominated shares listed on the Shanghai and Shenzhen exchanges via Hong Kong.
Hong Kong: A Hub for Emerging Markets
Victor Fung Kwok-king, chairman of Fung Group, sees Hong Kong’s strong financial market as a launchpad for medium-sized enterprises from mainland China, India, and other emerging markets to pursue global ambitions. As manufacturers shift production processes to other Asian countries, Hong Kong is well-positioned to provide trade finance and other funding options.
Challenges Ahead
Despite the opportunities, Hong Kong and mainland China face challenges and uncertainties in economic policies and US-China tensions. Decoupling in the semiconductor industry is a pressing concern, with the US restricting the export of high-end chips and technology.
A Call to Cooperation
Tsai believes that countries will need to work together to develop artificial intelligence and related technologies. “This is kind of silly” and would ultimately harm US chip companies’ profits, he said. In the long run, cooperation will be key to finding a solution.
Hong Kong’s Financial Prowess
As a leading financial hub, Hong Kong is well-equipped to navigate the complexities of global markets. Its capital market will continue to play a vital role in connecting investors and facilitating growth in the region.
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