The Hong Kong Stock Exchange is the first place Chinese mainland companies look at when they need to raise capital for busines expansion

The first Chinese insurance company to list its shares outside the mainland surpassed all expectations in the largest share offering in Hong Kong this year highlighting the SAR's paramount role as a fund-raising centre for mainland companies.

PICC Property and Casualty raised HK$5.4 billion (US$694 million) and saw its stock jump 50 percent as it made its debut on Hong Kong's main board. The PICC initial public offering (IPO), the first by a mainland financial institution, marks a new stage in the restructuring underway in China, and comes ten years after the listing of the first H-share company in Hong Kong. (H shares enable mainland-based enterprises to list on the SAR's stock market).

"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," said Richard Peng, senior vice-president of the China development and listing promotion unit of Hong Kong Exchanges and Clearing Ltd (HKEx).

Talented pool of professionals

Hong Kong's capital market has reached international standards in all respects, Mr Peng added. "Not to mention the huge pool of financial professionals such as accountants, lawyers, investment consultants and market analysts here." 

"Generally speaking, mainland-based enterprises and mainland-affiliated enterprises play a significant role in the Hong Kong financial market as they provide more investment choices to investors here," said a HKEx spokesman. 

Analysts believe that by broadening the range of listed stocks the listing of mainland insurance companies will have a positive impact on the stock market, resulting in a more balanced mix of stocks and further enhancing Hong Kong's role as an international financial centre.

Listing of mainland companies to continue

PICC, the largest of the three mainland property insurers, is expected to be followed by the two top mainland giants in the life insurance field. Both Ping An Insurance and China Life plan to list in Hong Kong in the near future.

"The market capitalisation of mainland-based (H-share) or mainland-affiliated (red chip) companies listed on the main board and the secondary Growth Enterprise Market (GEM) now accounts for more than a quarter of the total market capitalisation and the turnover of these enterprises now accounts for nearly 40 percent of total turnover," said the stock exchange spokesman.

"We have seen mainland-based enterprises from a wide range of industries list in Hong Kong and we expect that trend to continue. We believe the trend of mainland-based enterprises, state-owned or private, listing in Hong Kong will continue."

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