Stock Connect Expansion Will Attract More IPOs: FS

Financial Secretary Paul Chan on Sunday said China’s move to allow mainland investors to trade in shares of more overseas companies listed in Hong Kong, will help entice more firms to list in the SAR.

Writing in his blog, Chan said the expansion of the Stock Connect trading scheme – announced by the vice-chairman of the China Securities Regulatory Commission Fang Xinghai on Friday – would also help increase the liquidity and valuation of the securities benefiting from the scheme.

The expansion, he said, will “help to attract high-quality and well-known firms with close business ties to the mainland to list in Hong Kong, enhancing Hong Kong’s competitiveness and uniqueness as the nation’s international financial hub.”

Chan noted that mainland authorities are also looking for Hong Kong to launch yuan-denominated stock trading counters in future, saying investors would have greater trading flexibility once they have the option of using two different currencies to trade in the same stock.

The finance chief said a government working group has been preparing for the technical challenges, and a bill to waive stamp duty for market makers in yuan-denominated southbound stock trading should reach the Legislative Council later this year.

Chan said the new initiatives mark a new stage in the increasing interconnection between financial markets in Hong Kong and the mainland, and urged the city to innovate further so it can contribute more to the country’s overall development.