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City serves as platform for satisfying two-way funding needs
27 May 2022 – Hong Kong has been named as an ideal overseas listing destination for Association of Southeast Asian Nations (ASEAN) companies in a research report^ prepared by the Hong Kong Trade Development Council (HKTDC) in collaboration with CCB International (CCBI).
HKTDC Director of Research Irina Fan said: “With the Regional Comprehensive Economic Partnership (RCEP) free trade agreement coming into effect on 1 January 2022, closer regional economic integration will foster funding needs for projects across Asia, particularly with regard to ASEAN companies’ projects in Mainland China and vice versa. Hong Kong is ideally positioned to serve as a platform to satisfy two-way funding needs.”
Simon Lee, Head of Corporate Finance & Capital Market Services of CCB International, said: “This is a highly informative and well-researched paper for any executive of an ASEAN company seriously considering fundraising via an overseas listing, and in which the insights of many stakeholders in the region are shared. Hong Kong stands out as the top choice for the listing of ASEAN companies seeking overseas funding.”
Most popular overseas listing destination for ASEAN companies
There are already more than 80 ASEAN-headquartered companies listed on the Hong Kong Stock Exchange – the highest tally for a non-ASEAN stock market. These listed ASEAN companies represent a variety of sectors covering consumer discretionary, property and construction, information technology and industrial businesses with a total market capitalisation at US$15.3 billion. This indicates that Hong Kong is the most popular overseas listing destination for ASEAN companies, representing a wide variety of enterprises in terms of sector and size.
The research report highlights that Hong Kong’s attractiveness to ASEAN companies is due to a range of factors including good market breadth and depth, efficiency and flexibility in funding overseas investment, access to more diversified financial and strategic investor pools, its position as a doorstep to expansion in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and Mainland China, strong governance, and the convenience provided by it being in a similar time zone to ASEAN countries.
Strengthening promotion in ASEAN countries
To facilitate ASEAN companies’ needs and enhance Hong Kong’s position as an overseas listing hub for these enterprises, Ms Fan highlighted some of the key recommendations proposed by survey interviewees. “Hong Kong should step up its promotion in ASEAN countries to raise companies’ awareness. Indeed, it is clear that some ASEAN companies need to be more informed about the latest developments relating to Hong Kong’s listing regime and policies,” she said.
HK well positioned for ASEAN companies in prevailing and emerging sectors
Survey interviewees highlighted that in addition to prevailing sectors in ASEAN such as consumer goods and services, mining and commodities and real estate investment trusts (REITs), fast-growing sectors including biotech, high-tech enterprises and fintech are showing good potential, while environmental, social and governance (ESG) is becoming an increasingly important factor across Southeast Asia. Interviewees suggested that Hong Kong can further reinforce its position as a listing destination for both prevailing and emerging sectors in ASEAN by streamlining its processes for overseas listing and the new special-purpose acquisition company (SPAC) regime, in addition to providing listing incentives for REITs. Hong Kong is also in a strong position to respond to the growing need for ESG funding in the ASEAN bloc.
Closer collaboration with ASEAN exchanges to promote dual primary/secondary listing
Hong Kong can also enhance collaboration with ASEAN exchanges to promote dual primary/secondary listing in Hong Kong. “Hong Kong is the gateway between ASEAN countries and Mainland China. By working with ASEAN stock exchanges to facilitate the dual or secondary listing of ASEAN companies in Hong Kong, all parties would be better positioned to capture the growing opportunities,” Ms Fan added.
Hong Kong as preferred listing destination for Malaysian companies
The report also gave insights into overseas listings by Malaysian enterprises. The Hong Kong Stock Exchange has the largest number of listed Malaysian companies among key stock exchanges outside ASEAN, and Hong Kong is well perceived by Malaysian companies as an important gateway for expanding into Mainland China. Leveraging Malaysia’s economic growth and further economic integration in the region, Malaysia’s fast-growing IT sector and growth companies could be potential candidates for listing on the Hong Kong Stock Exchange through the new SPAC route.
^ The report is based on desktop research and interviews conducted by the HKTDC from September 2021 to January 2022. Interviewees included senior executives/members of listed companies, chambers of commerce, professional organisations, legal practitioners, accountants and investment bankers. Interviewees were asked to share their insights on Hong Kong’s strengths as a listing destination for ASEAN companies, some of the hurdles ASEAN companies are facing, as well as recommendations to strengthen Hong Kong’s position as a listing hub. The first research report in this series focuses on the overall overseas listing regime of Hong Kong as well as Hong Kong as a listing destination for Malaysian companies, while two subsequent reports on Thai and Indonesian companies listing in Hong Kong will be released later this year. Disclaimer
· HKTDC Research Portal: https://research.hktdc.com/en
· “Hong Kong as a Listing Destination for ASEAN Companies”: https://bit.ly/3ajmAkV
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