“While I don’t comment on individual cases, I am very confident that strong support from the central government is reaching mainland Chinese companies,” he said of measures to link cross-border companies with Hong Kong’s stock market.
“Currently, the IPO market outlook for Hong Kong is very strong. We believe we will see more large IPOs listing in Hong Kong in the second half of the year, particularly in the third quarter.”
Hong Kong IPOs raised HK$11.6 billion across 27 deals in the first half of 2024, down 35% in funds and 15% in deal volume compared to the first half of 2023.
Chang attributed his optimism to conversations with executives at mainland Chinese companies who said it had taken longer for listings to be approved by the China Securities Regulatory Commission than in Hong Kong.
The financial secretary said it would be easier for companies such as deep tech firms to list in Hong Kong because the city has special rules for the innovation sector that take into account that start-ups may not be able to make a profit initially.
“In the early stages, multiple rounds of fundraising are needed to support research and development, so Hong Kong is a natural platform for these kinds of companies,” he said.
Zhang added that Shanghai has opened up new sources of funding for Middle Eastern companies that are less concerned about geopolitical factors and have high hopes for mainland China’s economic development.
“The business environment and [our] “We are aligned with the highest international standards so the rules and regulations are more familiar to them,” he said.
Hong Kong has been struggling to reverse public pessimism about its economy, which has been overshadowed by geopolitical tensions with the United States and Europe and changing spending habits among residents.
Economic growth in the first quarter of 2024 was 2.7% year-on-year, at the lower end of the government’s forecast, while private consumption increased 1% year-on-year.
Critics also point out that sluggish real estate and stock markets are doubly hurting residents’ “wealth effect.”
Despite the bleak outlook, Chan rejected criticism that the government lacked ideas, saying it had addressed structural change and diversified the economy by developing new industries such as artificial intelligence, data analytics, fintech, new materials, new energy and medical technology.
He also noted that Hong Kong is repositioning itself as a hub for international supply chains, with some manufacturers choosing to relocate to ASEAN countries as a result of tariff restrictions imposed due to geopolitical tensions.
Mr Chan said he would be visiting Australia in September to further promote the city’s investment opportunities, visit local enterprises and meet with the business community.
The financial secretary said he had held “interesting discussions” with various sovereign wealth funds and long-term investors in recent months, and revealed that the government-owned Hong Kong Investment Corporation (HKIC) had received interest from more than 100 companies wanting to do business in Hong Kong.
“They’re interested in coming and asking us to invest,” Chan said of the companies. “But of course we have to be careful because we’re not just investing for investment’s sake.”
He added: “We need them to bring value beyond financial gain. That’s the strategy we’re pursuing.”
HKIC, the government’s investment arm, manages HK$62 billion (US$8 billion) in assets and has a fund that invests in technology companies to spur innovation and diversify Hong Kong’s economy.
Earlier this week, HKIC inked a deal with BioMap, a Beijing biotech company founded by Robin Li Yanhong, founder of Chinese internet giant Baidu, marking the fund’s second public listing move as the city looks to bolster its technology sector.
Through this partnership, BioMap will establish an R&D accelerator called BioMap InnoHub, which aims to support over 50 early-stage projects in cutting-edge life sciences by prioritizing projects recommended by Hong Kong universities and industry partners.
Asked how Hong Kong International Investment Corporation (HKIC) compared with Singapore’s sovereign wealth fund Temasek Holdings, Chan said such a comparison was “unfair”.
“We are not a sovereign wealth fund,” he said, noting that HKIC has a “dual purpose”.
“On the one hand, the Hong Kong government needs to use this money to invest and earn revenue. But more importantly, it needs to use this money to attract the right companies to Hong Kong.”
“It doesn’t matter if the financial return is low as long as they can bring tangible benefits. I’m sure that after a little more time has passed, the results will become more visible.”
Chan said HKIC would announce further plans by next month.
