EDGE Magazine | Q3 2011
Companies incorporated in the offshore jurisdiction accepted by HKEX need not have expensive pre listing re-structuring which otherwise increases the cost by 30 % to 100%.
HKEX allows listing of companies incorporated outside Hong Kong. This benefits corporations and investors who utilize offshore companies as their business vehicles. United Company RUSAL, the Russian company that is the world’s largest aluminum producer, listed on the HKEX in January 2010 by using a Jersey company as its listing vehicle and raised USD 2.2 bn. Glorious property Holdings, company incorporated in Cayman island raised USD 1.53bn its IPO.
Companies already listed in other stock exchanges may choose Hong Kong for secondary listing which offers excellent opportunities for further capitalization. Glencore International which is incorporated in an offshore jurisdiction has a secondary listing in Hong Kong which raised about USD 10 bn.
The key sectors that are largely listed on HKEX are natural resources and branded consumer. Investments in these sectors are gaining importance in Asian countries like India and China, as a result investors prefer to list in the HKEX this attracts investments in large amounts.
Advantage of HKEX Listing:
With close trading and business links to other Asian economies, Hong Kong is strategically placed in a high growth region. As an internationally recognized financial centre with an abundance of professional expertise, HKEX has provided many Asian and multinational companies with fund- raising opportunities.
When a company decides to list, they think through the venue for listing of its shares. Hong Kong is one of the most chosen and favourable market for companies to list its shares. The rule of law, free press, open markets, transparency, unfettered capital mobility and a fully convertible currency gives it a distinct advantage. Hong Kong has a strong legal system established and based on the lines of English common law. These features instil confidence in investors, whose motive is to raise funds and create a strong foundation for the listing of its shares.
Hong Kong is rightly placed and perfect location as a financial centre as it has access to the growing markets like China and other high growth Asian economies. For fund raising the opportunities are plenty. This market attracts Foreign Institutional Investors (FIIs) in large numbers, as the country allows free flow of capital, provides tax advantage, easy convertibility of currency and transferability of securities.
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Hong Kong allows and accepts various accounting principles and standards other than their own on a need basis. It has sound regulatory framework and banking system in place. HKEX is transparent in its trading, clearing and settlement of securities. The Hong Kong’s Monetary Authority also allows the real time foreign exchange settlement of USD to the Hong Kong dollars at the Asian time zone, this avoid any time gap between the settlements.
Conclusion:
Hong Kong has become one of the world’s leading capital markets and a significant source of capital for companies choosing to list their shares here. Hong Kong securities market led the world for the second consecutive year in raising funds through IPOs, which raised a total of $445 Billion.
In the securities market, total equity fund-raising rose to an all-time high of $850.1 billion, led by Hong Kong’s single largest IPO ever. Turnover of Exchange Traded Funds (ETFs) also reached a record
high.These statistics as on Jan 2011 portray a live example of significant benefits of listing in Hong Kong stock exchange.
This combined with success of IPOs of Companies incorporated in Offshore Centres ; makes HKEX listing a very attractive option for companies from these Centres.
http://www.applebyglobal.com/publication-pdf-versions/articles/articles-2009/jersey-companies-accepted-on-the-hong-kong-stock- exchange-(danny-cole)-november-2009.pdf
http://www.hkex.com.hk/eng/listing/listhk/advantages_of_listing.htm
http://www.hkex.com.hk/eng/newsconsul/newsltr/2011/Documents/2011-01-02-e.pdf 35
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