HKEX London office must only be a start
- Welcome Hong Kong move made as battle among exchanges globally to attract and retain listings becomes cutthroat
It is far better to trade than to fight. Amid rising tensions between China and the West, it is surely a good thing that Hong Kong’s stock exchange is opening offices overseas.
Hong Kong Exchanges and Clearing (HKEX) has launched a new London office this month to attract British start-ups to raise capital in Hong Kong.
This will contribute to the London-Shanghai Connect scheme, an investment channel between the two financial hubs.
HKEX already has offices in New York and Singapore as it strives to attract global fundraising from the “traditional” financial centres of the world and diversify its roster of listed companies, most from the mainland.
A London office will also help HKEX reach start-ups in continental Europe. The exchange almost opened an office in the European Union but it ultimately decided on London, which is deemed more convenient in providing operational access to the London Metal Exchange, owned by HKEX since 2012.
Hong Kong’s attraction lies in its being able to provide a deeper and wider capital pool than the London bourse. In the first half of this year, 22 companies raised US$2.3 billion from initial public offerings in Hong Kong, compared with 18 companies raising US$744 million in London.
Both numbers are down from a year ago, but Hong Kong is still three times more active.
The new London office will hopefully help attract more business to Hong Kong. HKEX has signed separate agreements with stock exchanges in Saudi Arabia and Indonesia this year in an attempt to expand in the Middle East and Southeast Asia.
With 31-degree weather and a Hong Kong taxi, HKEX opens new office in London
The battle among exchanges globally to attract and retain listings has become cutthroat. London has missed out on the listing for Arm Holdings, the British chip designer, valued at more than US$52 billion in this year’s biggest IPO, to New York.
Meanwhile, gold miner AngloGold Ashanti plans to shift its primary listing from Johannesburg to New York. And CRH, the world’s largest building materials company, British plumbing equipment maker Ferguson, and gambling company Flutter Entertainment – all listed in London – plan to relist in the Big Apple.
Hong Kong must step up its game. The office expansion is only a start.
