On March 24, Hong Kong Exchanges and Clearing Limited (HKEX) announced the expansion of the Hong Kong listing framework to include Specialist Technology Companies from five industries. This news followed discussions between HKEX and a broad range of entities, including investment firms, professional bodies, prospective listing applicants, corporate finance firms, and individuals.
Based on these conversations, HKEX concluded there was strong market support for this expansion, which it believes will “provide a new listing pathway for the rapidly growing new economy sector, supporting the growth aspirations of the companies of tomorrow.”1
The new listing regime, which is part of Chapter 18C of the Listing Rules, will take effect on March 31, 2023. At that time, companies operating in the five frontier specialist technology industries which seek to list under the new chapter may submit a formal application. These industries include next-generation information technology, advanced hardware and software, advanced materials, new energy and environmental protection, and new food and agriculture technologies.
HKEX has compiled a list of acceptable sectors that it believes fall into these industries. This list is included in a guidance letter under Appendix V of the Consultation Conclusions and will be updated periodically.
This expansion follows news that HKEX will expand its global presence with new offices in New York, Singapore, Shanghai, and Beijing, as well as plans to open an office in London.2 It also builds on previous efforts, including the 2018 listing reforms, which established Hong Kong as Asia’s premier biotechnology fundraising market, and the new Special Purpose Acquisition Company (SPAC) listing regime, which was introduced in Hong Kong in 2021.
These steps also had a positive impact—according to the HKEX, international investors currently account for around 41% of Hong Kong's cash equities market trading turnover, with US investors accounting for 10% of total turnover. Hong Kong is currently one of Asia's most preferred listing venues for new economy and biotech companies—more than 70% of all international investments into China's A-share equities market are held via HKEX's Stock Connect program, which provides international investors with exclusive and reliable access to the A-share market.
Combined with the reopening of China’s economy and a GDP target set at ‘around 5%’ for 20233 amid global uncertainty, China remains on a strong, positive growth outlook. I am confident that Hong Kong is well-positioned to strengthen its leading position as one of the world's major fundraising hubs in 2023 and beyond.
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References:
- HKEX announces New Specialist Technology Company Listing Rules (March 24, 2023) https://www.hkex.com.hk/News/Regulatory-Announcements/2023/230324news?sc_lang=en
- HKEX Announces Plans to Open London Office (March 2, 2023) https://www.hkex.com.hk/News/News-Release/2023/230302news?sc_lang=en
- 2023 Government Work Report (GWR) announced at China’s 2023 Two Sessions http://www.gov.cn/zhuanti/2023lhzfgzbg/index.htm
