As the global balance of financial power shifts, Chinese companies listed abroad may be looking to issue new offerings on one of their home country’s marketplaces.
Hong Kong Stock Exchange CEO Charles Li told CNBC on Monday that he expects many such companies to opt for an issuance on his own marketplace.
“We are one of China(‘s) home market(s), they can go back to Shanghai or Shenzhen or they can come to Hong Kong and there’s a lot reason for them to be in Hong Kong and I’m quite confident that many of them will.”
But no matter which exchange Chinese companies choose, Li described it as a near certainty that most will have stock trading in their home country eventually.
“My view has always been quite consistent, you know, for anybody who travels far far away, there’s going to be a time to come home.”
One of China’s biggest heavyweights, Alibaba, notably doesn’t trade on any Chinese markets. Some reports have indicated the U.S.-listed tech giant has been considering an issuance in Hong Kong, but Li told CNBC that he “cannot confirm or deny” because Alibaba has to confirm its plan first.
Charles Li Xiaojia, CEO of HKEx
South China Morning Post | Getty Images
In general, however, Li said the HKEX’s goal is to be prepared for when Chinese companies that are listed abroad decide to return.
Li touched on why he thought some Chinese companies would choose to list on Hong Kong’s market over its mainland siblings in Shanghai and Shenzen. The HKEX benefits, he said, from greater internationalization and because its approval process can go faster. The mainland markets, meanwhile, may reward companies with higher valuations, he added.
Ultimately, the CEO said, each company will make its decision based on a carefully considered strategy.
“Unlike investors who are in and out of the market everyday, companies have their own plans, their plans are planned months and sometimes years ahead,” Li added.