22 December 2022
Over the last few months, there have been calls to spin off the HSBC Asian operation into a separate entity. In the background, we have also seen several Far East technology companies repatriating their listings to Hong Kong. This then prompts the question, are global regulations holding back the progress of Asian-based businesses?
The old Hong Kong Shanghai Banking Corporation has been an integral part of the Far East investment scene for many years. Now known as HSBC, the Asian operation is just part of a broader banking giant with operations in all major countries. However, in recent months there have been growing calls for the company to spin-off the Asian operation under a separate entity to be listed on the Hong Kong Stock Exchange.
There is an argument to suggest that worldwide regulations have impacted growth in the Asian operation, with some investors pointing the finger at the Bank of England. The company still has a massive following in Hong Kong, and many investors were upset when the Bank of England restricted the payment of dividends during the pandemic. Even though the company has its foundations in the Far East, the parent company is now based in the UK and subject to Bank of England regulations.
Similarly, we have seen numerous technology companies looking to switch overseas listings back to the Hong Kong Stock Market. While some of these switches have occurred because of accounting differences, many are attracted by the growing influence and presence of Hong Kong. It has become a bridge between China and the West, catching the eye of many international investors and Chinese companies looking to raise capital.
While the IPO market has been depressed in 2022, many expect a rebound in 2023, with Hong Kong now firmly positioned in the top five global IPO markets. Whether it is the previously untapped investment base in China or the introduction of new regulations, which are more investor-friendly, changes are afoot.
On a related note, it is also important to recognise that the Hong Kong Stock Exchange recently relaxed regulations concerning crypto assets. Indeed this month saw the introduction of the first HK based crypto EFT. The fund uses the Bitcoin futures market on the Chicago Mercantile Exchange to take positions without physically holding any coins. This move is just the tip of the iceberg with a mix of Chinese financial power and huge global investor interest set to push the Hong Kong Stock Exchange to a different level.
While the HSBC board has apparently dismissed calls for a spin-off of the Asian operation, with some demanding a separate Hong Kong listing, Asian investors are becoming more vocal. This bodes well for the APAC region, which boasts an array of leading stock markets in China, Hong Kong, and Singapore. In addition, Korea is also becoming a significant player in the IPO market as the region continues to flourish.
In the 1980s, Japan was the leading stock market in the Far East, but this power and influence have recently switched to Hong Kong. Backed by a very proactive Chinese government, the Hong Kong Stock Market is at the epicentre of all things financial. So what does the future hold for the Hong Kong stock market and Asian investors?Back to News