Encourage leading enterprises in the mainland industry to list in Hong Kong, Li Jiachao and Chen Maobo speak out!

Hong Kong Chief Executive John Lee said that the Hong Kong Special Administrative Region (HKSAR) Government will continue to enhance the competitiveness of Hong Kong's financial market.

On 19 April, the China Securities Regulatory Commission (CSRC) announced five measures to further expand and enhance the Stock Connect mechanism, help Hong Kong consolidate and enhance its status as an international financial centre, and jointly promote the coordinated development of the capital markets of the two places.

Five major measures have been taken to deepen co-operation with Hong Kong

It is understood that the five measures include: relaxing the scope of eligible products for stock exchange-traded funds (ETFs) under the Stock Connect, including infrastructure securities investment funds (REITs) in the Stock Connect, supporting the inclusion of RMB stock trading counters in the Hong Kong Stock Connect, optimizing the mutual recognition of funds arrangement, and supporting the listing of leading enterprises in the mainland industry in Hong Kong.

Following the release of the measures, the Shanghai, Shenzhen and Hong Kong exchanges said they had reached a consensus on expanding the scope of Stock Connect exchange-traded funds (ETFs).

The optimization of the ETF target mainly includes two aspects: one is to reduce the size requirement for the inclusion of exchange-traded funds (ETFs), and the other is to reduce the index weight ratio requirements for exchange-traded funds (ETFs). It is expected that the official implementation of the relevant optimization measures will take about 3 months to prepare.

It is worth mentioning that among these five measures, it is specifically proposed to support eligible leading enterprises in the mainland industry to list in Hong Kong. It is understood that in the year since the issuance and implementation of the rules of the overseas listing filing management system, 72 companies have completed the filing of initial public offerings (IPOs) in Hong Kong.

Hong Kong Chief Executive John Lee said: "The announced measures are an important step to support the further development of Hong Kong's financial market, increase attractive investment products, provide more investment opportunities for domestic and foreign investors, and strengthen Hong Kong's position as an offshore renminbi business centre." I would like to express my heartfelt gratitude to the Central People's Government and relevant ministries and commissions for their strong support for the development of Hong Kong's financial market. The further expansion of mutual access between the financial markets of the two places demonstrates the country's solid support for enhancing Hong Kong's status as an international financial centre, and fully demonstrates that the country is the greatest backing for the development of Hong Kong's financial industry. The HKSAR Government will continue to enhance the competitiveness of Hong Kong's financial market, actively contribute to the development of the country into a financial power, adhere to its international characteristics, and continue to add momentum to its development. ”

The Financial Secretary, Mr Paul Chan, said, "The expansion of the Stock Connect will further enhance Hong Kong's important role in connecting the Chinese and foreign capital markets, enable us to better play our unique role as a platform for two-way capital introduction and high-quality enterprises, and enrich the asset allocation options of Mainland and international investors as well as offshore RMB investment options, which will contribute to the steady and prudent progress of RMB internationalisation." The country's support for the listing of leading enterprises in the Mainland industry in Hong Kong will benefit Hong Kong's IPO market, and the listing of more enterprises with long-term development and return potential in Hong Kong will also drive the development of the secondary market. Further expanding the product coverage of mutual access will help broaden the investment options of domestic and foreign investors and facilitate their asset allocation, which will attract more capital to flow into the capital markets of the two places and benefit the long-term development of the markets. Allowing Mainland investors to trade Hong Kong stocks in renminbi through Southbound trading will enhance the investment function of renminbi overseas. ”

"We would like to express our heartfelt gratitude to the Central People's Government for its strong support, as well as the relevant ministries and agencies in the Mainland for their cooperation and assistance. We will liaise closely with the relevant ministries and agencies to implement the relevant measures as soon as possible and take forward the relevant supporting work at full speed, including the exemption of stamp duty on unit transfer of real estate investment trusts, the extension of the 'Subsidy Scheme for Open-ended Fund Companies and Real Estate Investment Trusts', the enhancement of the regulatory regime for collective investment schemes and real estate investment trusts, etc., as well as strengthening investment attraction and exploring new sources of capital, so as to continue to enhance the development momentum of Hong Kong's financial market. ”

Hong Kong is the preferred springboard and platform for Mainland enterprises to enter the international market

On April 21, Chan Mo-po said in his personal blog that many mainland enterprises have applied or are considering applying for listing in Hong Kong, and they have seen the institutional advantages of the Hong Kong market and the seamless integration with international standards, and believe that overseas financing will accelerate their development in the mainland and international markets. There are also a number of I&T enterprises based in the Yangtze River Delta, which also look at the synergies between Hong Kong and other cities in the Greater Bay Area, such as the I&T collaboration platform with Shenzhen. They hope to make full use of the Yangtze River Delta Economic Circle and the Guangdong-Hong Kong-Macao Greater Bay Area, two national development strategies, to push the company's business to a new level with regional linkage.

It is reported that Chen Maobo visited Hangzhou and Suzhou last week, and visited a number of private enterprises engaged in artificial intelligence, Internet of Things, biotechnology, new energy, new materials and other fields. Mr Chan said that during the exchange with mainland technology companies, he was particularly impressed by the fact that many entrepreneurs are young and have an international vision, and have invested a lot of resources and manpower in R&D and innovation, pursuing technological breakthroughs and enhancing the competitiveness of products and services.

In the process of accelerating their development, these enterprises are expanding their sights from the mainland to the international market, and hope to use Hong Kong as their preferred springboard and platform to enter the international market, including the establishment of treasury centres and international business headquarters in Hong Kong.

Mr Chan said that for many enterprises, Hong Kong has a number of advantages, including the free flow of capital, goods, data and talents, the connection to the financial markets and services of the mainland and the world, the fair and open business environment and simple and low tax rates, extensive and close international connections, efficient and high-quality professional services, familiarity with international rules and practices, and the recruitment of talents from all over the world. In addition, quite a number of enterprises wishing to set up R&D centres in Hong Kong have pointed out that Hong Kong's well-established intellectual property protection system will enable them to develop a new business format of "patent operation", and that Hong Kong has also pooled Mainland and international data, and has gradually opened up cross-border data flows with the Greater Bay Area, providing an important foundation for R&D.

Another purpose of Chan's visit was to introduce to local companies how Hong Kong can help them manage their transnational industrial and supply chains, as well as finance offshore trade and expand their international business.

"In the exchange session of the seminar, many companies told me that in order to better grasp the opportunities of international business, whether it is in logistics and transportation, marketing and sales, investment and factory establishment, overseas procurement and other different links, they hope to deploy to a wider range of regions and make better use of overseas resources, so as to achieve better development and cope with the challenges of geopolitics and unilateralism." In fact, Hong Kong has a variety of advantages that can create greater value for mainland enterprises in the process of expanding their international business, with one-stop services ranging from supply chain management, trade finance, business advisory to talent and corporate training. ”

Editor-in-charge: Li Dan

Proofreader: Li Lingfeng

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