SEHK Plans Beijing Representative OfficeHong Kong's stock exchange is planning to open a representative office in Beijing early next year to attract more mainland enterprises to list in the region, Hong Kong Exchanges & Clearing Chief Executive K.C. Kwong said recently.Kwong, speaking to reporters following a speech, said the office would probably open early next year and would have a "handful" of staff members dedicated to marketing the Stock Exchange of Hong Kong (SEHK) to mainland enterprises. The move comes as the Shanghai and Shenzhen stock exchanges prepare for an eventual merger, presenting a potentially powerful new competitor to Hong Kong as the market of choice for listing. In addition, China is considering opening its A-share markets - now reserved solely for domestic investors - to qualified foreign institutions, which could draw some Hong Kong investors to the mainland. But Kwong downplayed the threat of potential competition from the mainland and said the Hong Kong bourse simply needed to market more heavily on the mainland. Mainland company listings are important to the future development of Hong Kong Exchanges & Clearing, which was created through the merger of Hong Kong's stock and futures exchanges early this year and was listed in June, Kwong said. He said the recent decision by Shanghai Baosteel Group Co to limit the listing of its Baoshan Iron and Steel Co unit to Shanghai-listed A-shares was "purely a commercial decision" by Baosteel. He added that he hopes a Hong Kong listing of the firm's shares could still be accomplished sometime next year. Kwong told the American Chamber of Commerce that even if China's currency becomes fully convertible, international investors and listing candidates will still look to Hong Kong because of its quality, its liquidity and regulatory regime. But he added that the Hong Kong stock market must continually improve its regulation and transparency to match the world's best practices. "We cannot afford to become complacent and simply feel that companies on the mainland will come to us because we are here," he said. Kwong also said Hong Kong Exchanges & Clearing was working closely with the China Securities Regulatory Commission and the Shanghai and Shenzhen stock exchanges to improve cross-border co-operation. But he said he was not optimistic about the prospect of mergers of major Asian stock exchanges because of political, currency and regulatory differences between them. Exchange mergers are "unlikely to happen in Asia because of the differences in the economic environment, the legislative frameworks and regulatory approaches, the currencies and so on," Kwong said. "It does not mean that it is impossible, but it would be very, very complicated." Nonetheless, Hong Kong Exchanges & Clearing continues to talk to other exchanges, both regionally and globally, about co-operative efforts, but Kwong declined to provide specific details. |
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