[ad_1]
In the weeks leading up to the planned public offering of Ant, the Chinese fintech group controlled by billionaire and Alibaba founder Jack Ma, Hong Kong bankers radiated confidence. Here, it was said, was undeniable proof that the future of the city as a financial center was secure.
After more than a year of social upheaval, disruptions from the coronavirus pandemic, and a national security law that raised fundamental questions about the city’s legal system, they seemed to be right. Then, earlier last month, the Hong Kong-Shanghai double IPO was abruptly suspended from Beijing, days before the shares began trading, as China pushed forward regulations targeting online lenders and monopoly practices in the its technology sector.
However, following this 11th-hour turmoil, few believe the city’s status as a major financial center is in jeopardy, even as much of its financial sector continues to shift towards even greater dependence on Hong Kong’s role as a channel. main between Chinese and global finance.
“Hong Kong’s financial stature is greater than any deal, and much larger than even the equity capital markets alone,” said Jason Elder, partner of Mayer Brown, the global law firm. He adds that issuance on equity and debt capital markets has been resilient despite a year of unprecedented disruptions. “The city’s status as an international financial center remains strong,” he says.
Investors and traders admit that the delay for Ant scared the city’s financial sector and forced a reshuffle for markets that had used the planned listing – and the huge funds flowing into Hong Kong before it – as a focal point.
“[Ant] it would really bring in a lot of cash flow by the end of the year, “says a local hedge fund manager.” Everything was lined up around that. “
The delay to the city’s major IPO of 2020 will make it harder to outrun rival exchanges in New York and maintain its listing crown – already a challenge, thanks to the tens of billions of dollars in issuance by special acquisition firms, or Spacs. , on Wall Street.
But for standard issuance IPOs, Hong Kong is still facing its US rivals. In terms of funds raised by non-SPAC IPOs, Hong Kong’s nearly $ 39 billion from primary and secondary listings this year places it just behind the $ 41 billion raised from IPOs on Nasdaq, the US lead, according to Dealogic data.
That puts it a staggering distance from breaking last year’s record of $ 40 billion made possible by a secondary “homecoming” announcement of nearly $ 13 billion from Alibaba a year ago, which set the stage for more giants in the world. Chinese technology to raise billions of dollars closer to home in 2020.
Alicia García Herrero, chief economist for Asia Pacific at Natixis, says it’s been a “great year” for the flow of business in Hong Kong’s capital markets. But he added that the city was moving further from its position as a global financial center to a role primarily as an offshore hub for Chinese finance: “In Hong Kong, the concentration of companies on the mainland is enormous.”
This is confirmed by analysis of Hong Kong financial regulator’s Financial Times data, which shows that mainland China companies in the city now employ more than 2,100 licensed investment bankers. That’s just a few hundred fewer than the number that works for Wall Street’s swollen bracket investment banks like Goldman Sachs and Morgan Stanley.
Meanwhile, rival Shanghai is gaining more traction as a destination for China’s international investment banking teams. Its tech-focused Star market has enjoyed a bumper year as Beijing has pushed companies to tap into local markets as it seeks to wean the country from its reliance on US capital markets.
In fact, most of the listings in Shanghai this year were on Star, which was founded in July 2019. While the hiatus in Ant’s IPO could deprive China’s leading onshore exchange of its crown jewel for a while. agreement is more a sign of the times than a catalyst for change in its own right.
“We are seeing Shanghai transition from being primarily a hub for domestic banks to a place where international banks now consider it crucial to be down to earth if they are to win significant roles in some of these onshore deals,” says Alexander. Owen, head of research at the Coalition investment banking intelligence group.
Mr. Owen says foreign banks’ focus on acquiring a larger share of the fee pool in Shanghai has intensified as China pushed forward this year with an effort to make Star a “top destination” for listings. of Chinese technology and “a direct challenger to the Nasdaq”.
“We see growing participation by international banks in some of these onshore operations going forward, which reflects the demand from international investors for a piece of this pie,” he says.
But while Star has attracted more business to the ground, Hong Kong remains vital to China’s largest and most powerful tech groups, even as they face internal regulatory pressures.
Investors took a serious break this month as Beijing announced new regulations limiting monopoly power in the industry. This resulted in a sell-off that wiped nearly $ 290 billion in value from the Hong Kong stock market as shares in Alibaba, Tencent and JD.com plummeted. However, after these losses, the Hang Seng Tech Index tracking these and other flagship tech groups listed in the city was still up nearly 70% in 2020, reflecting the high concentration of the largest and fastest tech groups. growth of China listed in Hong Kong.
Ms. García Herrero of Natixis says the city’s advantage over Shanghai would remain, thanks to capital controls that prevent it from achieving true global financial pre-eminence. However, he adds that it does not guarantee that Hong Kong’s future will be as cosmopolitan as its past. “I don’t know what Hong Kong’s future will be, but I’m pretty sure it won’t be a global financial center. Hong Kong is now China’s financial center, which is different, “he says.
Source link
