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[Chinese concept stocks return. 2) Hong Kong in the world, New York in China? |01 Weekly

2021-02-08T08:10:30.893Z


As more and more Chinese concept stocks return and choose to list in Hong Kong, coupled with the continued pursuit of these new economy companies by mainland and international funds, it has a positive effect on Hong Kong’s capital market and greatly strengthens its presence in Asia and even the whole world.


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Written by: Chen Xunlin

2021-02-08 16:00

Last update date: 2021-02-08 16:00

As more and more Chinese concept stocks return and choose to be listed in Hong Kong, coupled with the continuous pursuit of these new economy companies by mainland and international funds, it has a positive effect on Hong Kong's capital market and greatly strengthens its financial center in Asia and the world. status.

All kinds of favorable factors undoubtedly drive Hong Kong to actively seek a financial center positioning that adapts to the new international landscape—not only the "international Hong Kong", but also the "China's New York."

To undertake the above:

【Return of Chinese concept stocks.

1. Why did China concept stocks return to Hong Kong?

According to KPMG accounting firm (KPMG), the global IPO financing amounted to US$263 billion last year, an increase of 23% over 2019. Hong Kong’s IPO financing amounted to US$50.3 billion, a 10-year high, an increase of 24%, accounting for approximately 45 percent of the world’s total. %, second only to the US$53.5 billion of Nasdaq.

Xintong Zhan, an assistant professor in the Department of Finance of the Chinese University of Hong Kong, said that apart from bringing immediate listing and trading income to Hong Kong’s financial industry, many mainland companies that come to Hong Kong for listing have some unique needs, such as convertible bonds. Wait for new financing channels to seek the next round of funding.

The Hong Kong financial industry not only relies on IPOs to promote, but also has many derivative investment tools to develop.

In fact, in the past two years, more and more new economy companies from the Mainland have come to Hong Kong for listing, which has greatly increased the flow of funds in the Hong Kong stock market.

In particular, the rapid recovery of China's economy from the epidemic has made these mainland new economy companies listed in Hong Kong highly sought after by international funds. Not only are international investment funds willing to hold China concept stocks, mainland funds and even annuity funds want to participate. among them.

The Ministry of Human Resources and Social Security (hereinafter referred to as the "Ministry of Human Resources and Social Security") issued a notice at the end of last year. Starting from January 1 this year, the investment scope of annuity funds will no longer be limited to China, but can be expanded to invest in Southbound stocks; At the end of January, the first batch of five Hong Kong stock-based pension products was approved by the Ministry of Human Resources and Social Security.

Alibaba is a successful example of Chinese concept stocks returning to Hong Kong for listing, and its valuation has attracted many companies to return to Hong Kong for listing.

(Profile picture)

Take advantage of the momentum to promote the internationalization of the RMB

As of September last year, the total size of mainland annuity funds was approximately RMB 3.1 trillion.

The Ministry of Human Resources and Social Security pointed out that broadening the investment scope of annuity funds will not only help annuity funds maintain and increase their value and improve their treatment, but also drive more funds to flow into the Hong Kong stock market and promote the stability and prosperity of the Hong Kong financial market.

According to mainland analysis, there are many types of Hong Kong stocks and leading technology stocks can make up for the shortage of A shares. In addition, some stocks have high dividends, which are favored by annuity funds and bring huge opportunities to Hong Kong.

In addition to being an important gateway for international capital to flow into China, Hong Kong is also the world's largest offshore RMB business center.

Li Xiaojia, who has just stepped down as the chief executive officer of the Hong Kong Stock Exchange last month and is now a senior adviser to the board of directors of the Hong Kong Stock Exchange, said when he attended the "Economic Summit Forum" organized by "Hong Kong 01" last week, Hong Kong's positioning is international and Chinese. "Translation machine", interconnection should be further expanded to "New Stock Connect", in the form of a RMB counter, allowing mainland investors to subscribe for shares of international companies in RMB. At the same time, the counterparty can exchange the RMB raised from the fund into Chinese government bonds. More foreign investors hold RMB assets and let the RMB go out. He hopes that Hong Kong can become a bridge for RMB internationalization.

Li Xiaojia also pointed out that after five years of interconnection development, Hong Kong’s transaction volume has risen to tens of trillions of yuan, and the two places hold each other’s market capitalization of several trillion yuan. Hong Kong is already a successful trading market. Evolving into an investment market, international funds should not only be invested in listed companies, but should be introduced to unlisted SMEs in the Mainland, such as investing in technology companies in the Greater Bay Area, "buying all its future "harvest" come back."

In recent years, the Hong Kong Stock Exchange has continuously reformed and improved market regulations, such as considering shortening the IPO settlement cycle for listing of new shares, and promoting the "New Stock Connect". The Hang Seng index companies have also allowed "same shares with different rights" and second-listed companies to be included in Hang Seng. Indexes, China Enterprise Indexes, and Technology Indexes and other stock selection categories make the composition of Hong Kong stocks more in line with the development direction of the new economy; some secondary-listed companies are also eligible for "Southbound Stock Connect", adding incentives for the return of Chinese concepts.

On the one hand, these measures help guide international funds to invest in mainland enterprises and promote the economic development of the mainland. On the other hand, they also provide channels for mainland funds to share the return dividends of this Chinese concept stock, and establish Hong Kong as an "international Hong Kong" and a "Chinese New York’s positioning.

Hong Kong should take advantage of the return of Chinese concept stocks to promote the internationalization of the RMB.

(Data Picture/Photo by Luo Junhao)

Hope to help transform Hong Kong's industrial structure

As China's concept stocks continue to return, it will inevitably change the future pattern of Hong Kong stocks.

Most of them are large-scale technology companies dominated by the new economy. In the wake of this change, some stocks such as real estate and banks that have always been regarded as "blue chips" will be eclipsed.

In the most recent HSI quarterly review, the number of constituent stocks in the HSI increased to 52. Among them, the technology company Meituan Dianping "Dyeing Blue" and the real estate developer Taikoo were eliminated.

As the old economy with low price-to-earnings ratio declined or was kicked out, the HSI also benefited. In addition to increasing the price-to-earnings ratio, the number of technology stocks in the Hong Kong stock market increased sharply, which also helped increase market acceptance and matured the pricing model. .

In this wave of Chinese concept stocks returning, Hong Kong will undoubtedly benefit most from the financial services industry.

Financial services cover a wide range, including banking, insurance, securities brokerage, asset management and other financial services. It accounts for 21.2% (approximately RMB 580.1 billion) of GDP in 2019. It is the industry with the highest proportion, with more than 273,000 people.

From the data point of view, Hong Kong’s future financial development is still thriving, but apart from providing financial services, can Hong Kong create other industrial values ​​in the process?

For a long time, the capital market in Hong Kong was dominated by real estate and finance, with relatively few new technology companies.

Zhan Xintong believes that the listing of Chinese concept stocks in Hong Kong will not only make Hong Kong's stock trading more diversified, but also promote the transformation of Hong Kong's industrial structure.

In the era of mobile Internet, many mainland enterprises have also risen with their own advantages. Among the constituent stocks of the MSCI China Index, new economy stocks have increased by 1483% in the past ten years, while the old economy stock index has only increased by 82%, reflecting more and more Many new economy companies have gained recognition in the investment market.

In the long run, it is the general trend to continue to promote economic transformation and stimulate domestic demand with new technologies, so as to maintain steady macroeconomic growth.

However, Hong Kong has been slow in this regard.

"When you see a lot of new (economic) companies going public, (you will ask) why such companies can gather so much capital in Hong Kong? Why have our industry and high technology failed to develop like this? We can learn from it. What?" said Cao Jie, an associate professor of finance at the Chinese University of Hong Kong.

When the concept stocks were listed in the United States in that year, investors would understand their background and business during the investment process, thereby deepening their understanding of China, and they could also be inspired by China’s rapid growth. This is for Hong Kong There are also references.

The transparency of the Hong Kong Stock Exchange's system is one of the reasons for attracting Chinese concept stocks.

(Information Picture/Photo by Jiang Zhiqian)

Take, for example, the Internet pioneer Sina (SINA) in the Mainland, which was privatized and delisted from the US stock market last year and was rumored to be preparing to return to A-share or H-share listing.

Established in 1998, it was only two years away from the NASDAQ exchange in April 2000.

Twenty years have passed. Sina has begun to dabble in financial business in recent years. As an Internet giant at the time, despite the decline in Weibo and its stock price and performance deteriorating, Sina is undoubtedly a rare force in promoting the development of the Internet. The gate for capital to go public in the United States—Many Chinese companies followed the variable interest entity (VIE) model first used by Sina to raise funds and go public overseas. Between 2000 and 2015, about 84 companies listed overseas under the VIE model, including Alibaba, In addition to mainland Internet companies, Baidu and others benefited from investors in the US stock market.

History keeps repeating. China concept stocks have once again left and come to the Hong Kong market. Cao Jie believes: "The listing of new economy stocks in Hong Kong will enable the public to understand the source of the world's economic growth. Before investing, they will also understand why (new economy stocks) will So popular... Can Hong Kong people do some similar businesses? Although this cannot be changed in a moment."

Cao Jie believes that this is a problem that Hong Kong needs to face at the moment: "Companies come to Hong Kong to list, and then Hong Kong people profit from it... Do you want to sit here and collect dividends, or do more things?" Such as listing on Friday Kuaishou Technology is hard to find. The first-hand lottery rate is only 4%, that is, only about 28,000 of the 696,000 "first-hand parties" win the lottery. If the lottery is successful, one hand will make 18,500 yuan. How to distribute after becoming bigger? Or continue to do well in Hong Kong's industry? This is difficult, and it is not just an economic topic." For Hong Kong, it is both a matter of interest and a top priority for Hong Kong to cultivate new economic growth points.

The above was published in the 252th issue of "Hong Kong 01" Weekly (February 8, 2021) "Chinese concept stocks abandon the US and return to Hong Kong will become the Chinese version of Nasdaq."

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Highlights of the 252 issue of "Hong Kong 01" Weekly News:

[Cover report] Chinese concept stocks abandon the US and return to Hong Kong to become the Chinese version of Nasdaq

Hong Kong is very rich, but everyone is very poor. Dismantling the myth of public finances

Interview with Hong Kong University's Chief Vice President Wang Yujian's misunderstood "Rental Buying Standard Bearer"?

The second "Economic Summit Forum" successfully concluded political and business leaders brainstorming to seek development opportunities in Hong Kong

The fate of the same heart stent at different prices is very different

Thirty years later, marine plastic may be more plagued by the silent cry of sea turtles

[Technology.

In the future] Satellite launches are rising, it’s time to face up to space pollution

01 Weekly report in-depth report on Chinese concept stocks, Hong Kong Economic IPO, new shares listed on the Hong Kong Stock Exchange

Source: hk1

All news articles on 2021-02-08

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