stock markets

FAST FACTS: Major finance milestones as Hong Kong marks 25 years since handover

Reuters
FAST FACTS: Major finance milestones as Hong Kong marks 25 years since handover

CENTRAL. A taxi drives in the financial district Central, ahead of the 25th anniversary of Hong Kong's handover to China from Britain, in Hong Kong, May 20, 2022.

Tyrone Siu/Reuters

Here are some major milestones for Hong Kong's financial markets

HONG KONG – Hong Kong returned to China in 1997 after 156 years of British colonial rule. Here are some major milestones for the city’s financial markets:

Hong Kong dollar trading band

The Hong Kong dollar was pegged to the US dollar on October 17, 1983, with a trading band of between 7.75 and 7.85 per US dollar imposed since 2005. The Hong Kong Monetary Authority, the city’s de-facto central bank, regularly enters the market to buy or sell the currency to keep it within the band.

Dual Hong Kong and mainland listings

Industrial and Commercial Bank of China became the first company to execute an initial public offering simultaneously in Shanghai and Hong Kong in 2006 when it issued A-shares and H-shares to raise US$21.9 billion, the largest deal in the world at the time.

Stock, bond, and wealth connect

Shanghai-Hong Kong Stock Connect was created in 2014 to provide mutual access between the equity markets of Hong Kong and mainland China. Two years later, the program was expanded to Hong Kong and Shenzhen Stock Connect, which allowed mainland investors access to smaller companies in Hong Kong and international investors access to new economy companies listed in Shenzhen. The connect programs now cover about 2,000 stocks, according to Hong Kong’s Securities and Futures Commission. In May, China’s securities regulator agreed to include exchange-traded funds in stock connect programs with Hong Kong.

In 2017, Bond Connect was launched to replicate the equity schemes and allow foreign investors to invest via Hong Kong in China’s multitrillion bond market. The Northbound Bond Connect has become a major channel for foreign investors seeking access to China’s bond market. In September last year, China said it would permit its investors to trade offshore debt with the opening of the Southbound leg of its Bond Connect channel.

Wealth Management Connect launched in September 2021, linking China’s southern province of Guangdong with Hong Kong and Macau, to allow cross-border funds management. The program enables residents of Hong Kong and Macau to buy mainland investment products sold by banks in the Greater Bay Area, while allowing residents of nine Guangdong cities to buy those sold by banks in the two offshore centers.

Must Read

Hong Kong’s top finance executives bank on city to thrive as gateway to China

Hong Kong’s top finance executives bank on city to thrive as gateway to China
Weighed voting rights

Hong Kong Stock Exchange announced in 2018 it would allow companies with dual-class shares – or weighted voting rights – if they are considered to be “innovative,” in a move designed to facilitate listings from emerging business sectors. The decision was described by the law firm Skadden as the most significant change to Hong Kong’s listing rules in 20 years.

Wave of secondary listings

The weighted voting rights changes in 2018 prompted a wave of secondary – or homecoming listings – which kicked off with Alibaba Group in November 2019. The Jack Ma-founded e-commerce giant raised $12.9 billion in the deal that was the largest share sale in Hong Kong at the time for nine years. Since then, 18 companies have raised $42.3 billion, according to Refinitiv data. The pace of homecoming listings has remained strong as Chinese companies trading in New York prepare contingency plans as US authorities press ahead with delisting firms that don’t meet regulators’ auditing requirements.

Futures

HKEX launched its MSCI A-share index futures product in 2021, an attempt to meet demand from investors in Chinese stocks for hedging tools at a time of surging volatility.

Special purpose acquisition corporations (SPACS)

Hong Kong Stock Exchange allowed special purpose acquisition corporations (SPACs), known also as blank check companies, to start trading from January 1, 2022, in line with most other major markets in the world.

However, tight restrictions on the type of investors which could buy into the SPACs and banning retail participation dented demand for the products along with the current bout of market volatility.

Only two SPACs have listed since the start of the year. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.