Richard Peng of Hong Kong Exchanges and Clearing says Hong Kong is the first choice of Chinese companies looking for overseas listing

"More than 130 applications from companies wishing to list in Hong Kong have been received so far," said Richard Peng, senior vice-president of China Development and Listing Promotion at Hong Kong Exchanges and Clearing Ltd (HKEx).

A similar figure was mentioned by Edmond Chan, a partner with international accounting firm PricewaterhouseCoopers (PwC).

PWC forecasts that 110 companies will seek to launch their Initial Public Offerings (IPOs) in Hong Kong, raising at least HK$25 billion (US$3.2 billion).

Companies in the financial services and real estate sectors are expected to take the lead. Among the former are Shenzhen-based Ping An Insurance, the mainland's second-largest insurer, as well as the People's Insurance Co of China (PICC) and China Life Insurance.

In the property sector, Beijing-based SOHO China has decided to drop New York and launch only in Hong Kong. Beijing Capital is another property firm planning to tap into Hong Kong's equity market, while other companies poised to list include transportation company Sinotrans, telecom firm China Netcom, power company Guangdong Power Grid Co and electronics firm ZTE Corp.

"I think more and more Chinese companies understand why Hong Kong is their first choice for overseas listing. It is one of China's stock markets - their home market. If companies want convertible, transferable funds, they should choose Hong Kong," Mr Peng said.

High ranking market

He pointed out that Hong Kong's stock market ranked number nine or 10 in the world in terms of market capitalisation, but in terms of capital generated - "the first concern of companies" - it was number five or six last year, ahead of Tokyo and London. "Hong Kong is always very high on this index," he said. 

"In the past two years both the H-share index and the secondary market, the Growth Enterprise Market, performed quite well. The average price of these stocks outperformed the main board by between 30 per cent and 40 per cent. That's very good. It reflects the performance of the Chinese mainland economy."

	Edmond Chan of PricewaterhouseCoopers says international investors are familiar with Hong Kong's stock market and its high standards

"Investors interested in Chinese companies are mainly based here," Mr Peng said. "Hong Kong has a good reputation for its financial performance. It is a well regulated market."

According to HKEx statistics, the number of "China enterprises" (red-chip and H-share companies) that were listed on the Hong Kong stock exchange rose from 94 in 1996 to 146 at the end of December last year. Their market capitalisation accounted for 26 per cent of the Hong Kong stock market total.

During 2002, H-shares raised HK$131.5 billion (US$16.9 billion) on the main board and HK$9.3 billion (US$1.2 billion) on the Growth Enterprise Market (GEM), while red chips raised HK$398 billion (US$51.2 billion) on the main board, bringing the total funds raised by both groups to a whopping HK$537 billion (US$69 billion).  

Cumulatively, mainland-linked companies have raised HKS$718.9 billion (US$92.4 billion) on the Hong Kong bourse since 1993 when Tsingtao Brewery Company became the first H-share firm to make its debut in the market.

Related links:
HKEx www.hkex.com.hk
PWC www.pwcglobal.com