Hong Kong regains some lustre amid China's gloom
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Chan Ka Sing
HONG KONG, Nov 22 (Reuters Breakingviews) -This time last year social media pundits were claiming Hong Kong had become a “ruin of an international financial centre”. The Hang Seng Index .HIS was about to be one of the worst performers globally, while funds raised by initial public offerings were the lowest in 20 years. The mood was very different on Tuesday as senior officials from China made a rare appearance alongside CEOs including Goldman Sachs’GS.N David Solomon and Citigroup’s C.N Jane Fraser at the Global Financial Leaders' Investment Summit. That's sign that Beijing will lean on Hong Kong more to tap global capital and navigate looming U.S. tariffs.
Vice Premier He Lifeng, who in 2023 only provided a pre-recorded speech, this year came in person, leading a large delegation including China Securities Regulatory Commission (CSRC) Chair Wu Qing.
The vice premier pledged Beijing's backing for the city to strengthen its status as an international financial hub. It seemed to be an attempt to prove that the "one country, two systems" constitutional principle in Hong Kong is alive and well, at least for the financial-services industry.
Meanwhile, the government's pursuit of democracy advocates, often cited as one reason for the city's decline, was playing out in court five minutes' walk away: 45 activists were sentenced to jail for up to 10 years following a national security trial.
Granted, He Lifeng's speech was long on rhetoric and short on detail. But the CSRC has been building a bit of a track record. Measures unveiled in April aimed at making it easier for leading mainland firms to list in the city seem to be paying off. In September, home-appliance heavyweight Midea 000333.SZ sold $4 billion of stock, and Logistics giant S.F. Holdings 002352.SZ is planning a $800 million offering. IPOs this year topped $9.1 billion so far this year, per Dealogic data, compared with just $5.9 billion in all of 2023.
It's not only companies that come to Hong Kong for capital. The Guangdong government raised 5 billion yuan ($691 million) here in September. More sovereign offerings are in the pipeline as China finances its economic stimulus plan.
Hong Kong's rising importance to China may explain the appointment last week of Qi Bin as one of six deputies at the country's Hong Kong liaison office. The vice president of China's sovereign wealth fund and former Goldman executive is the first markets technocrat to hold such a political role.
Throw in the prospect of He fleshing out his promise of more reforms, and Hong Kong is on track to regain more of its lustre as a financial centre.
CONTEXT NEWS
Speaking at the Global Financial Leaders’ Investment Summit in Hong Kong on Nov. 19, Vice Premier He Lifeng pledged Beijing’s backing for the city to strengthen its status as an international financial hub. Beijing will also support more high-quality enterprises from China that want to list and issue bonds in Hong Kong. Wu Qing, chairman of the China Securities Regulatory Commission, also attended the summit to exchange views with CEOs from global firms including Citigroup, Goldman Sachs and Morgan Stanley.
The State Council on Nov.13 appointed Qi Bin, vice president of sovereign wealth fund China Investment Corp, to serve as one of six deputy directors at the central government’s liaison office in Hong Kong. Citing sources, the South China Morning Post reported that the 57-year-old is one of Beijing’s “brightest financial minds” and the move signals plans to boost financial cooperation with Hong Kong.
Graphic: Hong Kong IPOs have rebounded from a 20-year low https://reut.rs/3Om4QXa
Editing by Antony Currie and Aditya Srivastav
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