Despite the months-long anti-government demonstrations in Hong Kong, the territory has managed to maintain its position as one of the world’s most important financial hubs. This is in part down to prudent macroeconomic policies and the city being a gateway to mainland China and other Asian markets. Furthermore, it is still an extremely competitive financial hub and frequently ranks among the leading global financial centers in terms of stock market capitalization, initial public offering (IPO) fund-raising, banking, etc.
The strengths of and confidence in the financial sector were on full display recently with Alibaba’s IPO. It was widely reported at the time that after Alibaba’s IPO in November, Hong Kong reclaimed its position as the top IPO market worldwide in term of funds raised. As of the end of November, Hong Kong Exchanges and Clearing’s main board had raised US$34.05 billion, bypassing the Nasdaq at US$24.73 billion and New York Stock Exchange at US$22.59 billion, according to data from Refinitiv, a global provider of financial markets data and infrastructure.
To further illustrate the aforementioned points, here are three examples which highlight the strengths of Hong Kong’s financial sector.
Before Aramco’s blockbuster listing, Alibaba’s IPO was the largest of 2019 when it listed in Hong Kong in November. Alibaba raised US$11.2 billion in a secondary listing at a time when there were fears the protests had harmed the city’s reputation as a financial hub. The company first listed in New York in 2014.
“When Alibaba Group went public in 2014 , we missed out on Hong Kong with regret. Hong Kong is one of the world’s most important financial centers,” Daniel Zhang, CEO and chairman of Alibaba said.
The South China Morning Post reported that many first-time buyers of Alibaba stock in Hong Kong were institutional investors and fund houses from mainland China. It was the 4th most popular ever retail IPO in Hong Kong after Industrial and Commercial Bank of China (2006), MTR (2000) and Link Reit (2005)
Financial institution helps business community
In these trying times, it is important for a financial institution to communicate with its stakeholders on how it utilizes its financial expertise to help the local business community. This shows stakeholders tangible evidence that Hong Kong will continue its sustainable growth in the mid to long term. A good example of this is Standard Chartered Bank rolling out measures in response to the government’s measures to support small and medium-sized enterprises in September. The bank’s measures now allow SME clients of its retail banking to apply for a principal moratorium of up to 6 months which is renewable, subject to a maximum of 12 months in total under the bank’s SME Financing Guarantee Scheme and the SME Loan Guarantee Scheme.
Virtual banks to disrupt banking
The introduction of virtual banks in Hong Kong signals the start of smart banking in the territory. A virtual bank is a bank which primarily delivers retail banking services through the internet or other forms of electronic channels instead of physical branches.
The launch of virtual banks will promote fintech, innovation and financial inclusion in the retail segment, including small and medium-sized enterprises. Virtual banks will push traditional banks to enhance their current services, come up with new services and make better use of technology. All of which will spur innovation and competition in the banking sector in Hong Kong.
In total, the Monetary Authority has granted eight virtual banking licences, and now the race starts for Hong Kong to try to catch-up with Japan, Singapore and mainland China in the digital banking space.
With Hong Kong’s prime position and competitiveness in the region, there is always a positive feeling about the future of financial services. H+K Hong Kong has a solid history working with some of the world’s biggest companies on IPOs, helping financial institutions reach their stakeholders and, with the rise of digital banking, helping to position fintechs in the banking sector.
H+K Hong Kong is a full-service communications agency which has been enhancing shareholder value and relationships with the investment community and financial media for more than four decades.