Hong Kong Chamber of Listed Companies Proposes Strategies to Enhance the City's Economic Standing
The Hong Kong Chamber of Listed Companies (HKCLC) has proposed several strategies aimed at enhancing the city’s economic standing, particularly in attracting mainland technology firms and boosting market activity for smaller listed companies. These recommendations were presented to Chief Executive John Lee Ka-chiu during a recent consultation session ahead of his Policy Address.
Chan Ka-keung, the new chairman of HKCLC, emphasized that while Hong Kong has successfully attracted many mainland technology and biotechnology firms in recent years, there is still room for improvement. He pointed out that over 200 listing candidates are currently in the pipeline, but many of these companies use their fundraising to expand operations on the mainland or internationally rather than establishing a presence in Hong Kong.
"If these mainland start-ups have more of their operations in Hong Kong, it would provide more job opportunities for locals and support the city's economy," Chan said. His comments come after a period of significant reforms by the Hong Kong Exchanges and Clearing (HKEX), which introduced changes in 2018 allowing companies with multiple classes of voting rights and pre-revenue biotech firms to list here. In March 2023, Chapter 18C was introduced, enabling large tech companies to list even without revenue.
These reforms have helped Hong Kong become one of the largest fundraising centers for biotech, electric-vehicle (EV), and new energy firms. According to Permanent Secretary for Financial Services and the Treasury Salina Yan Mei-mei, the market capitalization of companies in the new energy and EV sectors reached US$806 billion, accounting for 13% of the total, with a sixfold increase in market cap over the last decade.
Recommendations for Further Growth
Chan suggested that Hong Kong should review ways to further enhance listing procedures, including expediting the approval process. He also called for collaboration between the government and regulators with mainland authorities to facilitate more cross-border listings. This approach could help attract both mainland and international start-ups to list in Hong Kong.
Established in 2002, the HKCLC represents approximately 300 listed firms, which account for about 30% of Hong Kong's market capitalization. The association focuses on promoting corporate governance and sharing its views with the government and regulators on market reforms.
Chan, who is also the chairman of digital lender WeLab Bank, highlighted the need for measures to boost market turnover for smaller companies. While the daily market turnover on Hong Kong's stock exchange increased by 132% in the first eight months of the year to HK$248.3 billion (US$31.8 billion), most of the trading was concentrated in the top 200 largest companies. Meanwhile, over 2,000 smaller companies remained largely inactive.
This disparity in trading activity has affected small brokers who rely on retail investors trading in the shares of smaller firms. According to data from the Securities and Futures Commission, nearly 200 brokers have closed shop since 2020, reducing the total to 498 as of the end of June, down from 606 in 2019. Although a few new players have entered the market, it has not been enough to reverse the trend.
Encouraging International Investment
Chan emphasized the importance of promotional efforts to help international investors gain a better understanding of the quality of smaller companies listed in Hong Kong. "Only when these investors have detailed information about these companies will they invest in them," he said.
By implementing these strategies, Hong Kong can continue to strengthen its position as a global financial hub and ensure sustainable growth for both large and small listed companies.
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