Hong Kong Beats New York For Second Place

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Dec 26 2006
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Hong Kong surged past New York this year and became the world’s second most popular place, after London for companies to float new stock listings. Hong Kong has raked in HK$307.7 billion, or US$39.57 billion, in IPOs, nearly twice as much as the HK$165.7 billion raised last year, according to Hong Kong Exchanges & Clearing Ltd.

London (LON : LSE) was the world leader for IPO equity raised, with $48.92 billion raised, according to the World Federation of Exchanges. Hong Kong was second and the New York Stock Exchange lagged back in third with $33.61 billion.

Two main factors which contributed to this are:
  • Hong Kong is next door to mainland China’s booming economy
  • Tough new U.S. accounting rules discouraged companies from listing in America.

Frederick Ma, secretary for financial services and the treasury said Hong Kong was already benefiting from a new clustering of businesses drawn to the city because of its success in finance. The world’s top 70 banks are operating there, he said. In 1995, the city only had 200 chartered financial analysts, but now it has 3,000 – ranking it No. 4 in the world behind the U.S., Canada and Britain.

However, Hong Kong is heavily dependent on listings by mainland Chinese companies which make up nearly 50 percent of the total market capitalization of $1.59 trillion, according to Hong Kong Exchanges & Clearing.

Shanghai is still a minnow compared to Hong Kong, which has average daily turnover of $4.21 billion – 12 times the volume of Shanghai but many believe Hong Kong will lose some of this investment as Chinese firms might decide to float more shares on the Shanghai Stock Exchange in the coming years.

One thing Hong Kong needs to be more aggressive about doing is attracting IPOs by companies that have operations in China but are owned by firms in the U.S., Canada, Germany and other places, said Ronald Arculli, chairman of Hong Kong Exchanges & Clearing.

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