Under the cloud of Sino-US tensions, the wave of secondary listings by tech enterprises in Hong Kong is expected to continue in the coming years, spurred by their unpleasant treatment on Wall Street and sanctions, experts say.
By May, 248 China concept stocks had gone public in the United States, with technology, media and telecom companies making up 70 percent of the total. Chinese concept stocks excluding tech giants Alibaba, JD and NetEase — which have listed in Hong Kong — command a combined market value of about US$900 billion.
As long as Hong Kong remains a politically stable market trusted by investors, it’ll become mainstream in the next three to five years for TMT companies to float in Hong Kong, said Chow Man-kong, deputy director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute at Lingnan University.
The special administrative region is qualified to be a major destination for the financing of emerging or innovative companies, and to breed a financial market catering for the new economy, he said.
For financial services providers and professionals in Hong Kong, it’s worth preparing for such a scenario, he said. The rising demand can also create more training and education opportunities to cultivate relevant talents, Chow said.
Since the Hong Kong Stock Exchange began allowing companies with a weighted voting rights structure to list in the city in 2018, it has attracted a host of tech giants. And Hong Kong has emerged as the world’s second-largest fundraising hub for biotechnology firms.
Despite the US decision to end Hong Kong’s special trading status, Financial Secretary Paul Chan Mo-po reckons that the impact on the city’s inno-tech development will be limited.
It might affect imports of some high-end technologies or equipment, but real cutting-edge tech can’t be imported easily, while others can be replaced by those from Japan, Germany or other European countries, he said.
Moreover, tensions between the world’s two largest economies might spark the return of more Chinese scientists and researchers from the US. Hong Kong can become an attractive alternative for them, as an international metropolis integrated with Chinese and Western culture under the “one country, two systems” principle, Chan said.
To lure overseas or mainland tech talents, the SAR government introduced the Technology Talent Admission Scheme in mid-2018, granting eligible talents fast-track visa arrangements. The initial plan was to provide 1,000 quotas annually.
Although the government has optimised the plan twice to broaden eligibility, only 365 quotas had been used by June this year. To win over more talents, further incentives must be in place to benefit those intending to come to Hong Kong, where living costs are much higher than Shenzhen, Chow stressed.
In an interview with China Daily, Mohamed Butt, executive director of the Hong Kong Productivity Council, said the nurturing of local talents is equally important.
He said the partially government-funded organisation has been telling local companies to apply for the Reindustrialisation and Technology Training Programme that subsidizes local companies and trains their staff in advanced technologies, especially those related to the city’s Industry 4.0 plan, which promotes the automation of manufacturing and industrial practices.
The council has recently been promoting Industry 4.0 and Enterprise 4.0, helping local companies to realize smart supply chain and production, develop inno-tech transfer of products and launch related training courses.
In the face of US restrictions targeting Chinese mainland tech companies, including Tencent, Huawei and ByteDance, as well as the scrapping of Hong Kong’s special trading status, Butt believes the impact will be very limited for research and development of small and medium-sized enterprises and startups.
“However, given the persisting uncertainties in international trade tensions, we strongly urge local SMEs and startups to find technologies and equipment from other markets, to reduce their dependence on US-developed technologies, platforms or software, and diversify risks, in order to be better prepared for different scenarios,” he said. - China Daily/Asian News Network
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