Gavin Geminder of KPMG says Hong Kong is an ideal market for attracting international buyers

The same study showed China has become the largest target market in the region as more overseas companies acquired stakes in mainland companies following its entry to the WTO.

Gavin Geminder, head of KPMG corporate finance for Hong Kong and China, said this reflects the positive attitude many overseas investors have towards China.

The KPMG study, which draws on data provided by global research and data company Dealogic, showed Hong Kong companies spent a combined HK$114 billion (US$14.61 billion) to acquire overseas firms during the first 11 months of 2002. Among the top 10 deals in Asia-Pacific this year, three involved Hong Kong companies as buyers.

China Mobile (Hong Kong), the SAR listed company of China's number one mobile phone operator, spent HK$79 billion (US$10.2 billion) to purchase seven provinces' networks from its mainland parent in July.  This was the largest transaction in Asia for the year.

Hutchison Whampoa's HK$9.8 billion (US$1.26 billion) takeover of Netherlands's Kruidvat Holdings in September ranked it the fifth, followed by Cheung Kong Infrastructure Holdings' buying of CitiPower in Australia in August at HK$6.1 billion (US$793 million).

Mr Geminder said these transactions demonstrated that Hong Kong companies remain strong in their financial strength. "It shows some SAR firms can still afford to buy despite the economic downturn.''

The China Mobile (Hong Kong) deal also reflected the SAR as a channel for foreign investors to invest into mainland assets through their Hong Kong-listed arm, he said.

He expects there will be more mainland companies using Hong Kong to carry out M&A activities because the SAR market is an ideal place to attract international buyers.  Although the WTO agreement will lead China to open more cities to foreign investors, Mr Geminder believes they will not bypass Hong Kong.
 
"Hong Kong is an established international financial centre. Its legal system and stock market regulation have been proven to work very well for a long time,'' he said.

Mr Geminder added: "It will take a long time for any mainland city to win the same level of confidence. Hong Kong will continue to be a springboard for overseas investors to enter into the mainland market.''
 
Overseas companies spent a total of HK$108 billion (US$13.9 billion) from January - November 2002 to purchase mainland firms, up 180 per cent from the previous year. This includes HSBC bank's spending of HK$4.6 billion (US$600 million) to purchase 10 per cent of mainland company Ping An Insurance in October.
 
Related links:
KPMG www.kpmg.com
Hutchison Whampoa www.hutchison-whampoa.com
HSBC www.hsbc.com