LCQ17: Attracting enterprises from ASEAN member states to list in Hong Kong
10.5.2023

Following is a question by the Hon Holden Chow and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (May 10): Question: There are views pointing out that with the rapid development of the member states of the Association of Southeast Asian Nations (ASEAN) (e.g. the fast trade and industrial development in Vietnam and the "Eastern Economic Corridor" of Thailand which shows significant development potential) in recent years, attracting enterprises from ASEAN member states to list in Hong Kong will help Hong Kong consolidate its status as an international financial centre. In this connection, will the Government inform this Council: (1) whether it knows (i) the number of enterprises from ASEAN member states which were listed in Hong Kong and (ii) the number of Hong Kong enterprises which returned to Hong Kong for listing after developing businesses in ASEAN member states (set out in a table) in the past five years; (2) in order to attract enterprises from ASEAN member states to list in Hong Kong, whether the authorities will offer related concessionary measures and arrangements, including whether considerations will be given to requesting the Hong Kong Exchanges and Clearing Limited (HKEX) to set up a dedicated team responsible for handling applications from enterprises from ASEAN member states in the listing application process; if they will, of the details; if not, the reasons for that; (3) whether the authorities will consider organising more online or physical seminars to publicise and promote to enterprises from ASEAN member states, and introduce to them the situation and rules concerning the raising of fund through listing in Hong Kong; and (4) whether it knows the respective average time taken by (i) enterprises from ASEAN member states and (ii) enterprises from non-ASEAN member states from submitting to the HKEX the "Listing Application Form (for Equity Securities and Debt Securities)" (i.e. Form A1) to successful listing in the past five years? Reply: President, As the global economic gravity shifts from West to East, emerging economies in Asia keep sustaining their development and deepening their economic and trade co-operation with the Mainland. The Association of Southeast Asian Nations (ASEAN) is an important economic region with sustained growth, and a major trading partner of the Mainland and Hong Kong. With Hong Kong as a leading international fundraising centre, the Government, the Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing Limited (HKEX) are committed to attracting companies from around the world (including ASEAN) to list and raise funds in Hong Kong for business expansion. In consultation with the SFC and the HKEX, the reply to the four parts of the question is as follows: (1) The number of ASEAN enterprises newly listed in Hong Kong (Note 1) in the past five years is as follows. Year Number of newly listed ASEAN enterprises (Note 1) 2018 16 2019 19 2020 13 2021 1 2022 2 In the past two years, global financial markets experienced relatively high volatility under the impact of macroeconomic factors such as the fluctuating COVID-19 epidemic situation, disruptions in supply chains and interest rate hikes by major central banks, which widely affected enterprises' business performance and stock valuation. As a result, issuers of major markets generally adopted a more cautious attitude towards fundraising through new share issuance. Hong Kong's performance in initial public offering (IPO) was similarly affected. With the local epidemic situation subsiding and social and economic activities resuming full normalcy, the Government and the HKEX are actively promoting the advantages of Hong Kong's listing platform to international target markets, particularly ASEAN, to attract potential issuers from different places to list in Hong Kong. (2) To facilitate listing of overseas issuers in Hong Kong, the HKEX has implemented a series of enhancement reforms since January 2022, including providing greater flexibility to dual primary listed issuers and formulating a set of core shareholder protection standards applicable to companies from different places, so as to ensure all issuers could meet the same baseline protection level. The measures provide greater convenience for overseas issuers to list in Hong Kong, conducive to attracting more quality overseas issuers (including ASEAN enterprises) to raise funds in Hong Kong and hence enhancing the competitiveness of Hong Kong's securities market. In addition, through close collaboration between the Mainland authorities, the Hong Kong Special Administrative Region Government and financial regulators, foreign companies that are primarily listed in Hong Kong can be included in the eligible scope of securities under Stock Connect from March this year upon meeting certain requirements. Not only will the arrangement raise Mainland investors' demand for global asset allocation, but it will also help increase the liquidity and valuation of overseas issuers' securities in Hong Kong's stock market, thereby attracting overseas companies seeking investment from the Mainland capital market to raise funds in Hong Kong. Having regard to the nature and competitiveness of Hong Kong as an international financial centre, the listing requirements of the HKEX aim to cater for different jurisdictions as far as possible, so as to facilitate potential issuers from different places to leverage the opportunities to list and raise funds in Hong Kong. The HKEX will continue to offer assistance to ASEAN issuers interested in listing in Hong Kong. The Government, the SFC and the HKEX will also periodically review and enhance the listing regime with a view to strengthening its competitiveness continuously. (3) The Government and the HKEX have been actively promoting the unique advantages of Hong Kong's capital market abroad, utilising various channels for publicising Hong Kong's good image internationally and connecting with overseas enterprises. In this regard, the Chief Executive led a delegation to Thailand in November 2022 to promote Hong Kong's advantages in different areas including financial services as well as the opportunities under "one country, two systems". The Financial Secretary visited Malaysia and Singapore in April this year to showcase Hong Kong's niches at the new stage of development. I also visited the Philippines and Thailand in the second half of 2022 to promote the latest developments in the various financial service disciplines of Hong Kong (including the fundraising platform). The Government plans to visit ASEAN again this year to attend conferences and to present to the business communities and enterprises the latest listing rules, listing channels and various opportunities in Hong Kong's financial market. To further expand the connection with potential issuers in ASEAN, the HKEX expanded its Singapore office in 2022 and has arranged a series of outreach activities to various ASEAN economies this year. These activities aim to promote the latest rules for listing and fundraising in Hong Kong, enhance the connection with target groups, and attract more ASEAN companies to set up businesses and raise funds in Hong Kong. The HKEX will also continue to organise online events to publicise Hong Kong's listing platform to overseas enterprises, facilitating issuers to better understand the state of play and advantages of the Hong Kong market. (4) The processing time of listing applications of newly listed companies from ASEAN economies and other jurisdictions in the past five years is as follows. Year Average number of days from application submission to approval at Listing Committee hearing Newly listed ASEAN enterprises Other newly listed companies 2018 149 176 2019 199 178 2020 257 175 2021 871 170 2022 326 233 The vetting of corporate listing aims to ensure the credibility of the information disclosed by the applicants in compliance with the listing requirements and on their business prospects. It is an important step in examining the compliance of listing applicants and maintaining market quality, hence safeguarding the interest of the subscribing investors. The actual processing time differs among listing applications, subject to issuers' individual circumstances. Since IPO activities were affected by external factors such as restrictions due to the epidemic, the above statistics only reflect the situation of individual enterprises (Note 2). Note 1: Including Main Board and GEM. As the major shareholders of enterprises may come from different places, the statistics are classified by the headquarters location or the place of principal business operations of the listed companies. The HKEX does not have a definition of "Hong Kong-funded" enterprises or maintain statistics of listed companies with Hong Kong-registered companies or Hong Kong residents as major shareholders. Note 2: Only one ASEAN enterprise and two ASEAN enterprises were newly listed in 2021 and 2022 respectively.