BIZCHINA / News
Mainland and Hong Kong bourses track joint path for equities growth
(Shanghai Daily)
Updated: 2007-06-27 08:28
The Chinese mainland and Hong Kong stock markets are expected to develop
in a mutually beneficial manner, with more quality firms conducting dual
listings and securities firms expanding across the border, industry
analysts said.
Market watchers also noted that the recent expansion of the Qualified
Domestic Institutional Investor scheme will make Hong Kong the key
beneficiary as mainland citizens channel funds outside to seek steady
returns.
"The two markets can ride on China's fast economic growth and ample
liquidity from the mainland and overseas," said Liu Minghui, a Kingwest
Investment Consultant Co analyst. "Big Chinese companies now hope to
issue both A shares and H shares to raise funds as well as their
corporate profiles."
Mainland companies accounted for 73 percent of equity raised last year in
Hong Kong and contributed to nearly half of the city bourse's market
capitalization, according to regulatory data.
Hong Kong last year hosted nearly 50 percent of the fundraising
activities by mainland enterprises, including giant banks and energy
firms, which raised more than US$45 billion through stock sales abroad.
Although Chinese mainland authorities are now encouraging big state-owned
enterprises to list domestically first, the frenzy for firms seeking a
Hong Kong listing shows no sign of abating, industry sources said.
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Hong Kong targets foreign listings
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Consumer-related companies including Goodbaby Group and construction
giants such as China Metallurgical Group and China Railway Construction
are expected to land on the Hong Kong market this year.
"Though Hong Kong and mainland bourses seem to compete for good listings,
it won't hurt either market in the long haul," said Wu Ke, a Zhongtian
Investment Consulting Co analyst.
"Companies with overseas exposures know Hong Kong is a good place for
them to catch the global spotlight while they also can't ignore the ample
liquidity and high valuation of the mainland markets.
"So what's the result? You will likely see a lot of dual listings in
coming years."
For the mainland side, with bellwether Hong Kong-traded red chips and
H-share companies coming back to list, the Shanghai and Shenzhen bourses
are set to feature better governance and steadier growth in stock
performance, analysts said.
A raft of Hong Kong-listed companies, including Ping An Insurance Co and
Bank of Communications, have sold yuan-denominated shares in Shanghai
this year, and several huge listings by Hong Kong-traded firms are in the
pipeline.
For the Hong Kong market, turnover is set to increase in the medium and
long term after the mainland regulator early this month started to let
brokerages and fund ventures help mainland citizens invest in securities
abroad.
Moves to forge closer ties between the two markets, which are expected to
be announced before the 10th anniversary of Hong Kong's handover on
Sunday, will let mainland brokers and fund firms to gain a presence in
Hong Kong.
Under the proposed arrangement, mainland securities companies will be
allowed to establish wholly owned subsidiaries or joint ventures in Hong
Kong to serve their domestic clients.
Qualified Hong Kong-headquartered brokerages are also likely to be
permitted to set up operations on the mainland market, potentially
tapping the large pool of investors keen to invest abroad.
The new policy, accompanied by the QDII project, will help siphon off the
huge liquidity accumulating on the mainland market to prevent possible
overheating and drive Hong Kong's stock index higher, analysts said.
(For more biz stories, please visit Industry Updates)
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