Hong Kong bourse operator to cooperate with Beijing Stock Exchange, Ningbo government to attract more start-up listings

Hong Kong Exchanges and Clearing, which runs Asia’s third largest stock market, has signed agreements with Beijing Stock Exchange and the government of Ningbo this week to explore ways to make it easier for start-ups and high-quality companies to list here, the bourse operator said on Thursday.

As part of a memorandum of understanding (MOU) with the Beijing bourse, the two exchanges will encourage companies to apply to list in each other’s market, and will work together on promotion, investor education, research and personnel exchanges. HKEX has signed similar agreements with its counterparts in Shanghai and Shenzhen in recent years.

The HKEX’s co-chief operating officer, Bonnie Chan, formerly head of listing, signed the MOU with Beijing Stock Exchange (BSE) deputy CEO Li Yongchun in the Chinese capital on Thursday.

“Our support for issuers to list in the Beijing and Hong Kong markets underscores BSE’s commitment to deepening reforms and further opening up its market, responding to the needs of the market,” said BSE chief executive officer Sui Qiang in a statement.

“It will allow more companies to leverage both markets as they build their scale and internationalise their profile.”

The cooperation between the two bourses will help “Beijing to become an international science and innovation hub, and strengthen Hong Kong’s role as an international financial centre,” Sui added.

HKEX boss Nicolas Aguzin said the agreement “paved the way for long-term, enhanced cooperation” between the two exchanges.

“Together with BSE, we look forward to supporting companies and investors across the region, matching capital with ideas and driving towards shared, long-term sustainable success,” he said.

China’s President Xi Jinping announced the plan to set up the Beijing Stock Exchange in September 2021, and 81 stocks started trading on the third mainland bourse two months later.

The BSE now has 203 listed companies with a total market capitalisation at 263.93 billion yuan (US$36.43 billion), and a turnover at 2.38 billion yuan on Thursday, according to data on its website.

It is far smaller than HKEX, which has over 2,600 listed companies worth HK$34.12 trillion (US$4.37 trillion) and a total turnover of HK$82 billion.

Separately, the HKEX signed an MOU with the municipal government of Ningbo, a major port and industrial centre in east China’s Zhejiang province, on Monday to explore ways to support companies based there that are interested in seeking a listing in Hong Kong.

They will jointly host seminars to introduce the local capital markets to Ningbo-based companies.

Ningbo is home to more than 10,000 manufacturing enterprises, making everything from new materials to smart appliances. In recent years the city has been accelerating the development of new-economy industries such as the digital and high-end equipment.

Hong Kong, which has been the world’s largest IPO market seven times in the past 14 years, is struggling this year, having dropped to seventh place in the rankings in the first quarter. It hosted just 17 IPOs raising US$837 million in the first three months of 2023, the worst first-quarter performance since 2009 during the global financial crisis, according to data from Refinitiv.

“The MOUs and other promotional efforts by the HKEX should help encourage more mainland start-ups to come to list here to raise funds,” said Gordon Tsui Luen-on, director of the Hong Kong Sec­urities and Investment Institute.

“Many mainland companies may not be familiar with the Hong Kong market, while HKEX is also facing competition from the Star Market in Shanghai and ChiNext in Shenzhen to attract technology start-ups to raise funds.

“The increased promotional efforts by the HKEX will be helpful in improving the poor IPO market this year.”

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