By Selena Li and Kane Wu
HONG KONG (Reuters) -Beijing will support more high-quality enterprises from China to list and issue bonds in Hong Kong, China’s Vice Premier He Lifeng said on Tuesday, offering backing to the city at a time its future as a financial centre is facing scrutiny.
Speaking at the Global Financial Leaders’ Investment Summit hosted by the Hong Kong Monetary Authority (HKMA), He said China’s recent stimulus measures were gradually taking effect and benefitting Hong Kong’s markets.
He said Beijing would help support Chinese financial institutions to expand their businesses in Hong Kong.
“We will improve the mechanism for the regular issuance of treasury bonds, steadily increase issuance in Hong Kong, and support Hong Kong in consolidating its position as a global financial business hub,” He said, without providing specifics.
Hong Kong’s standing as a regional capital markets hub has diminished in the past few years, with the value of initial public offerings and secondary listings sliding.
There have been $9.1 billion worth of listings in Hong Kong in 2024, according to Dealogic data, compared with $5.88 billion in 2023. Despite the pick up, issuance volumes remain well off the 2020 peak of $51.6 billion.
The deals slowdown has prompted Western and Chinese financial firms to slash hundreds of investment banking jobs in the past two years. Some international law firms have scaled back or exited their businesses in the greater China region.
The HKMA event is being attended by some of China’s top policymakers and global bankers who have gathered in the Asian financial hub.
It marks the first appearance of He, China’s top economic official, and all three of its main financial regulatory chiefs at the annual event that has been running since 2022.
TRUMP EFFECT
The event also comes as China is grappling with an economic slowdown, fuelled by a property sector debt crisis and the lingering effects of the pandemic lockdowns. Geopolitical uncertainties remain heightened in light of Donald Trump’s election as the next U.S. president.
Trump has proposed tariffs on Chinese made goods of at least 60%, in a move likely to further strain diplomatic and business ties between the two countries.
“Asia itself has very good core growth, 4.6%, even if you look at the tariff effect on China which will significantly affect Chinese growth, we think China can do quite a lot in terms of remediating that,” UBS chairman Colm Kelleher told the summit.
Citigroup (NYSE:C) chief executive Jane Fraser and Goldman Sachs chairman David Solomon told the forum the return of Trump to the White House next year should spur more corporate buyout activity on the prospect of reduced regulation.
“When we think about deregulation tapering there (U.S), we saw an almost immediate unlock happening with the election result,” Fraser said.
“… We saw a huge growth in our pipelines, almost overnight in M&A, IPOs, our sponsor clients are definitely back and I would call it the big unlock that we’ve been waiting for a long time.”
Beijing unveiled earlier this month a 10 trillion yuan ($1.38 trillion) debt package to ease local government financing strains and stabilise the country’s flagging growth.
($1 = 7.2364 Chinese yuan)