HONG KONG Hong Kong Exchanges and Clearing Ltd (HKEX) sees a trend of secondary listings by New York-listed Chinese companies bolstering its prospects, as the bourse reported a 1% increase in first-half profit on Wednesday.
E-commerce giant Alibaba completed its secondary listing in Hong Kong last year. Other companies including travel giant Ctrip and Baidu were considering Hong Kong listings, Reuters reported earlier this year.
HKEX hopes to attract more U.S.-listed Chinese firms, making use of a 2018 rule change that eased restrictions on secondary listings, and potentially benefiting from escalating Sino-U.S. political tensions.
“The growing trend of U.S.-listed Chinese companies seeking secondary listings on the exchange has brought, and will continue to bring, diversity and vibrancy to Hong Kong’s capital markets,” HKEX Chairman Laura Cha said in the results filing.
Chinese tech firms Netease and JD.com raised a combined $7.6 billion in secondary listings this summer, more than the other 61 Hong Kong IPOs combined in the first half, according to Refinitiv.
HKEX Chief Executive Charles Li said he was pushing for reforms of the “stock connect” schemes linking Hong Kong with mainland Chinese exchanges to allow investors there to trade in shares of companies such as Alibaba and other Chinese “returnee” companies in Hong Kong.
The scheme currently shuts out mainland investors from certain companies with secondary listings and different governance structures, such as Alibaba.
HKEX’s average daily securities turnover in the first half rose 20% year-on-year, as market volatility boosted trading and clearing fees that make up more than half of the company’s revenue.
However, a drop in investment income, due to losses on certain investment schemes, particularly in March, meant first-half net profit was HK$5.23 billion ($673.5 million), compared with HK$5.21 billion a year earlier.
HKEX was fifth among global exchanges ranked by the amount raised by companies in IPOs in the first half, according to Refinitiv data. It was second when including secondary listings.
Average daily volume of lots traded on the HKEX’s subsidiary the London Metal Exchange rose by 1% to 625,000.
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