Ba Shusong: The new economy is reshaping Hong Kong's capital market In the future, there is a broad space for cooperation with the mainland

Per reporter: Xie Tao Per editor: Liu Yanmei

Ba Shusong delivered a speech Image source: Photo by reporter Zhang Jian

On October 21, the China Capital Innovation Chengdu Summit kicked off in Rong, focusing on "diversified capital innovation and multi-dimensional financial supply". Industry authoritative experts and scholars, senior executives of national securities trading venues, heads of well-known venture capital institutions, secretaries of directors of domestic listed companies and other guests gathered in Rongcheng to discuss the development of the digital economy enabled by the whole life cycle financial supply, promote the cultivation and development of emerging industries with the power of the capital market, accelerate the construction of a "digital intelligence" ecology, and promote the leap in urban energy levels.

According to Ba Shusong, Managing Director of HKEX, Chief China Economist and Chief Economist of the China Banking Association, one of the most important functions of the capital market is to promote innovation, support innovation, and drive local economic development.

"The upward momentum of the capital market is mainly concentrated in the new economy and leading companies. At present, the Hong Kong Stock Exchange is implementing a series of policies and measures conducive to promoting the development of new economy enterprises, and at the same time, the development and growth of the new economy is reshaping Hong Kong's capital market. Ba Shu Song said.

<h2>The new economy is reshaping Hong Kong's capital markets And biotechnology is outstanding</h2>

Although affected by the impact of the epidemic and local trade frictions, the global capital market still shows very strong vitality and resilience. In Bashusong's view, this vitality mainly stems from the new economy. "Looking at the global capital market, whether it is the United States, or our Hong Kong, Shanghai, Shenzhen and Beijing New Third Board, the new economy companies have shown unique vitality in the turmoil."

Commenting on the latest trends in Hong Kong's capital markets, Ba Shusong pointed out that new economy companies are significantly reshaping Hong Kong's capital markets. "In the past, when people talked about Hong Kong's capital market, it was a large number of manufacturing industries and a large number of financial real estate. Now, the performance of the new economy is getting brighter. Seven of Hong Kong's top 10 IPOs in 2020 are from the new economy. In the first nine months of 2021, new economy companies raised 87% of the funds raised. He revealed.

As one of the world's largest initial public offering markets, in recent years, the Hong Kong Stock Exchange has effectively opened up channels for the listing of new economy companies through a series of policy measures such as secondary listing and differential voting rights, enabling them to connect with domestic and international capital markets more efficiently. Last year, the number of first-time offerings in Hong Kong reached 154, ranking second in the world in terms of total fundraising.

Taking biotechnology as an example, Hong Kong has become the largest biotechnology fundraising center in Asia and the second largest in the world, and the entire industrial ecosystem has been continuously improved around a number of listed companies. This is mainly due to a series of major reforms and innovations made by the Hong Kong Stock Exchange in response to the financing needs of new economy enterprises.

Ba Shusong said that since the new listing rules of the Hong Kong Stock Exchange came into effect, more than 70 biotechnology companies have been listed in Hong Kong, and the total amount of initial public offerings has exceeded HK$230 billion. Among them, 40 are innovative biotechnology companies that have not yet achieved revenue, and have been successfully listed through the "Chapter 18A", raising a total of more than HK$100 billion in initial offerings. "These have flowed into the real economy of biomedicine, driving innovation in biotechnology, many of which are used in the front line of the fight against the epidemic."

"Hong Kong-listed biotech companies are very competitive internationally, both in terms of deal activity and fundraising." Bashuson pointed out.

Speaking of Chengdu's biomedical industry, Ba Shusong said that Chengdu has a very important position in the national biomedical industry map. We are seeing more and more companies in different areas of innovation planning to list in Hong Kong, involving medical devices, outsourced services, diagnostic treatment, medical data, etc. "In the future, we hope that innovative enterprises from Chengdu, especially medical and health enterprises, will be able to make better use of Hong Kong's capital market."

<h2>HkEx Refinancing Advantages Are Obvious There is huge room for cooperation with the mainland</h2>

All along, compared with Shanghai and Shenzhen, HKEX has its own unique comparative advantages.

In recent years, more and more investors have entered the Hong Kong capital market through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, and the inflow of funds from the south has also reflected an increasing influence and become a very important investment force in the Hong Kong stock market.

Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect are gradually linking Hong Kong and the Mainland into a common market. Ba Shusong introduced that from the opening of shanghai-Hong Kong stock connect and Shenzhen-Hong Kong stock connect to the present, the cumulative southward capital of the mainland has exceeded 2 trillion yuan. Although the proportion of financial real estate is still relatively high, some new economic sectors are attracting more and more market attention, and the transactions of innovative companies are very active.

In addition to direct investment through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, investors also invest indirectly through more than 2,000 funds. "The market predicts that the average annual inflow of funds from the south is expected to remain at 500 billion to 600 billion yuan." Ba Shu Song said.

At the same time, Ba Shusong pointed out that more and more Chinese stocks are going to Hong Kong for the second listing, raising more than HK$300 billion, accounting for an increasing proportion of the total market value of Hong Kong stocks. For example, after Meituan and Xiaomi were included in the Hong Kong Stock Connect, it was obvious that their liquidity increased significantly. "This highlights the unique advantages of the HKEX, which can achieve seamless docking with domestic and international capital quickly and efficiently."

In fact, under different stages of development and development strategies, each exchange has its own advantages. Ba Shusong believes that a very important advantage of the Hong Kong Stock Exchange is that it is very convenient to refinance after the initial financing.

"Relatively speaking, our financing is very convenient and diversified, and the financing channels after the listing cover the subsequent issuance of additional shares, block transactions, and shares. Moreover, in terms of efficiency, bulk transactions and subsequent issuances can be carried out overnight, and the operation is very fast, further reducing market risk. Refinancing can be announced before the start of the next trading day in the morning, without suspension of trading, maintaining continuous trading. ”

Finally, Ba Shusong stressed that the "A+ H dual listing" proves that the win-win cooperation space between the Hong Kong Stock Exchange and the mainland exchange partners is very large, whether it is H first H, first A and then H, or the spin-off subsidiary of a listed company going to Hong Kong for listing, there is a very broad space and many new opportunities.

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