By Leslie Richardson
The link, seen as an important step in the financial liberalization of China’s economy, enables investors in Hong Kong and overseas to buy shares on the Shanghai Stock Exchange, while mainland investors will be able to buy stocks in Hong Kong. About half of Shanghai-listed companies will be available to Hong Kong investors. The program will allow a net 23.5 billion yuan ($3.8 billion) a day in cross-border purchases and is considered a significant move for further opening China’s financial markets as well as the internationalization of the yuan.
The Shanghai- Hong Kong stock connect program also creates the opportunity for Hong Kong to become a global destination for secondary listings by allowing international companies access to the $8 trillion of private wealth held by mainland China’s investors as well as the ability to expand their brand in China. Additionally, the link gives foreign investors greater access to Chinese companies with a strong domestic consumer following. The trading scheme is predicted to boost the average daily value of stock trading in Hong Kong by about 38 percent by 2015 and if the two stock markets are further integrated, they would form the world's third-largest equity market with a $5.6 trillion capitalization, according to Allianz Global Investors.
Companies have raised $17.7 billion in Hong Kong so far this year, according to Dealogic, putting the exchange in fourth place behind NASDAQ and London Stock Exchange which have each raised $21 billion and NYSE which has raised $65 billion, including Alibaba’s $25 billion deal. However, with the year coming to a close, more IPOs are expected to list in Hong Kong as November and December are normally the exchange’s busiest months.
Three high profile Chinese companies have plans to raise close to $10 billion before the year end which could push the exchange into second place globally. CGN Power, China’s biggest nuclear operator and Dalian Wanda Commercial Properties, China’s biggest commercial property developer, are looking to raise up to $3 billion and $6 billion, respectively. CGN is expected to benefit from a mandate by Beijing to cut the country’s reliance on coal.
The listing follows CGN Meiya Power Holdings Co’s (HK:1811) successful $262 million IPO in October, both companies are units of parent company, China General Nuclear Power Corp. Wanda Group which bought U.S. cinema chain, AMC Entertainment two years ago, plans to use the funds for the development of 10 commercial properties. Regional carrier Hong Kong Airlines is also looking to raise $500 million to buy new aircrafts and will be the first dual yuan-Hong Kong dollar offering on the exchange. Hong Kong Airlines which flies short-haul regional routes between Hong Kong and other destinations in Asia, plans to expand into 30 destinations in China as well as 10 new international destinations in Asia Pacific.
Business Insider: Next Week The Chinese Stock Market Will Explode In Size
Editors Note: Ms. Leslie Richardson has over 20 years of investment management and equity research experience. She operates a boutique investor relations firm in Hong Kong for Asian companies listed in the U.S. and Hong Kong. She also assists private companies develop investment material and build an investor following in preparation for a public listing. Additionally, she is the Asian Correspondent for MicroCap Review, www.microcapreview.com, a financial magazine focused on mircocap companies. Previously, she worked for CCG Elite in assisting Asian-based, U.S. listed clients formulate key communication strategies. Ms. Richardson began her investment career at U.S. Trust Company then went on to join Odyssey Advisors as a portfolio manager and Director of Research. Ms. Richardson specialized in high growth sectors such as bio-tech, alternative energy, IT and telecommunications. She earned her M.B.A. from the University of Southern California. Ms. Richardson is based in Hong Kong. www.elite-ir.com
© 2017 Stock News Now
Supported by Superior Web Solutions