The Hong Kong Stock Exchange (HKEX)’s efforts to attract more international listings will see it open its first European office in London, in the first half of this year, the bourse confirmed in a media release last week.
The new office will aim to promote to potential European issuers HKEX’s equities and derivatives offering, as well as its status as a gateway to mainland China's capital markets.
Currently, there are 158 international (excluding Greater China) companies listed on HKEX, comprising 6% of its full total, a spokesperson for HKEX told FinanceAsia.
International investors account for around 41% of Hong Kong’s cash equities market trading turnover, with European investors accounting for 10% of the bourse’s total turnover, the spokesperson added.
Sharnie Wong, senior equities analyst at Bloomberg Intelligence, told FA that Hong Kong’s pipeline of listings – which, according to HKEX is about 100-strong – continues to be made up largely, of local and mainland China firms.
“The main drive [for European firms to list in Hong Kong] remains access to Chinese capital through the Stock Connect schemes,” she told FinanceAsia, at a media event on Tuesday (March 07).
In December, the exchange expanded access to Stock Connect’s Southbound route, for those international firms that are primarily listed in Hong Kong.
Last week, HKEX subsidiaries, the Stock Exchange of Hong Kong (SEHK) and Hong Kong Futures Exchange (HKFE) became recognised overseas investment exchanges under the UK's Financial Conduct Authority, the release noted. HKEX has owned the London Metal Exchange (LME) since 2012.
Preparatory work to open the London office is “ongoing” and will be headed by Raymond Wong, head of Europe Middle East and Africa (EMEA) business development, the release detailed. He reports to Kevin Rideout, HKEX co-head of sales and marketing.
The bourse declined to share details on the office address, precise opening date, and target size of the UK team.
Plans to open a European office were first announced last year along with the news that HKEX would establish a presence in New York. The US office opened its doors at the end of December 2022, adding to the bourse’s international bases in Beijing, Shanghai and Singapore.
“Together with our newly-opened New York office, our footprint will now cover all key global time zones, supporting us as we connect capital with opportunities and East with West,” said HKEX chief executive, Nicolas Aguzin, in the latest release.
Other initiatives by the stock exchange to attract more overseas listings include a Memorandum of Understanding (MoU) with Saudi Arabia’s stock exchange operator, Saudi Tadawul Group, which was signed in February to explore cross-listing opportunities.
In response to a question about the upside of the Saudi agreement, raised by FA sister publication, AsianInvestor, at a media event, Wong said, “Yes, the size [of the Saudi exchange relative to HKEX] is a lot less, but any incremental growth is positive.” He underlined the long-term significance of the strategic agreement, in terms of its capacity to attract a future pipeline of IPOs.