In order to maintain the SAR's position as the business hub of choice for mainland enterprises with overseas aspirations, Hong Kong should strengthen its core advantages as an IPO and financing platform, and expand offshore renminbi business and professional services. Thomas Lee / Bloomberg

Experts call for greater efforts to help mainland firms go global via city's vital platform

With strategic industries and those related to Beijing's "One Belt, One Road" initiative emerging as the main driving forces behind mainland enterprises' "going global", Hong Kong must get more of them to list here to enhance the city's role as the super-connector between the mainland and the world, economists say.

The SAR has been a popular platform for mainland enterprises expanding overseas, which currently account for more than half of the mainland's outbound foreign direct investments, according to a report by the Financial Services Development Council (FSDC).

As the central government began prodding enterprises to "go global" in 2000, the number of mainland firms setting up operations in Hong Kong has been reaching a crescendo, hitting 957 late last year.

"As the leading international financial and business center in China, Hong Kong is poised to benefit by being the key facilitator for mainland enterprises in going global," said FSDC Chairperson Laura Cha Shih May-lung.

With an open and market-oriented capital raising regime, and hosting many overseas institutional investors, Hong Kong is also the leading international listing center for mainland issuers.

By the end of February this year, 891 mainland enterprises had been listed in Hong Kong, accounting for 61 percent of the Hong Kong Stock Exchange's total market capitalization and 71 percent of its equity turnover value.

Hong Kong Stock Exchange and Clearings Ltd Chief Executive Charles Li Xiaojia said the mainland dimension of Hong Kong's securities market and IPOs (initial public offerings) from the mainland have helped the city become a strategic link between the mainland economy and global capital.

Hong Kong's unique role as a special administrative region of China with its own economic and legal systems has put it in an ideal position for IPOs and other fund-raising efforts by companies from the mainland, Hong Kong and abroad, he said.

Traditional industries, like finance, resources, telecommunications, brokerage and healthcare, take up a big portion of Hong Kong-listed mainland enterprises, and more emerging industries are expected to be floated here in future, said Ben Kwong Man-bun, head of research at KGI Asia Ltd.

The central government has decided to accelerate the development of strategic emerging industries, including energy saving and environmental protection, new generation of information technology, biology, high-end equipment manufacturing, new energy, new material and new-energy vehicles. It aims that, by 2020, the ratio of added value of strategic emerging industries in the nation's GDP will have reached about 15 percent.

Kwong explained that these industries need to raise funds to expand their operations, and since they have a sound market foundation and credentials, it's easier for them to attract investors.

Liao Qun, chief economist and head of research at China CITIC Bank, said the nation's "One Belt, One Road" strategy is adding fresh impetus to the going global trend.

"'One Belt, One Road' is a national development strategy. It's a new turning point for some traditional industries whose outlook had not been promising in the past. These enterprises are very big, so is their financing power. We can expect more of them to list in Hong Kong in the near future," he said.

Major State-owned enterprises on the mainland are being restructured with the goal of improving corporate governance and internationalization, and the listing of holding companies in overseas markets is critical to achieving such a goal. CITIC Group was successfully re-domiciled and listed in Hong Kong through its listed subsidiary CITIC Pacific last year.

The FSDC said that, as many mainland companies, which already have a high degree of internationalization and overseas operations to conduct listing activities, the government should lobby them to list in Hong Kong to boost their long-term business opportunities and the city's employment market.

It suggested that, in to order maintain the SAR's position as the business hub of choice for mainland enterprises with overseas aspirations, Hong Kong should strengthen its core advantages as an IPO and financing platform, and expand offshore renminbi business and professional services.

felix@chinadailyhk.com

(HK Edition 05/19/2015 page11)