30 Jan 2018
Promising Prospects for Hong Kong as a Listing Platform for ASEAN Enterprises
The financial sector is one of the pillar industries of the Hong Kong economy, contributing around 18% of GDP. In 2017, Hong Kong Exchanges and Clearing Limited (HKEX) remains one of the most vibrant securities markets in the world with total market capitalization reaching a record level at HK$34 trillion, 37.3% higher than a year earlier. Though the total funds raised through initial public offerings (IPO) retreated to HK$128.2 billion, the number of IPO rose to a new high at 161, raising the total number of listed companies to 2,118 at the end of 2017. Over the past year, equity fundraising activities by overseas companies saw a remarkable jump. According to statistics from the World Federation of Exchanges, there were 131 overseas companies listed in Hong Kong in 2017, up from 101 a year ago, indicating a more internationalized equity mix in Hong Kong securities market.
Based on our internal estimates, most of the newly listed overseas companies in Hong Kong came from ASEAN countries (mainly Singapore and Malaysia). In 2017, there were a total of 22 ASEAN companies listed in Hong Kong, suggesting a very strong appetite for IPOs from ASEAN companies, compared to 1 and 10 listings in 2015 and 2016, respectively. In terms of the funds raised, ASEAN IPOs amounted to HK$7.05 billion in 2017, where 10 of the deals were worth at least HK$100 million (compared to 3 in 2016), and 12 ASEAN companies chose to list on the Main Board (compared to 4 in 2016). These figures reflected an upward trend for both the number of IPOs and deal sizes of ASEAN companies.
Following Mainland China, ASEAN is another large and fast-growing economy in Asia with tremendous potential and soaring funding needs. Also, Hong Kong has actively enhanced its economic ties with ASEAN. These macro factors will create a favorable environment for Hong Kong financial and professional services to expand into the ASEAN market and make Hong Kong an ideal listing platform for ASEAN enterprises.
1. Surging equity fundraising needs boosted by strong economic development
In recent years, ASEAN achieved stellar economic growth. The aggregate GDP of its ten member states approached US$2.6 trillion in 2016, making ASEAN the sixth largest economy in the world. With 630-million people and more than half of them under 30 years old, the region is poised to evolve into a sizeable consumer market in future. In Dec 2017, the Asian Development Bank (ADB) expected that buoyant trade and investment activities in ASEAN would continue and thus upgraded the GDP forecast for ASEAN to 5.2% in 2017 and 2018.
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