HONG KONG: Hong Kong is expected to loosen its
listing rules and launch a commodity futures market to attract more listings and
businesses as part of the efforts to maintain its status as Asia's financial
hub, Chief Executive Donald Tsang said yesterday.
In his annual policy address to the Legislative Council, the Special
Administrative Region's (SAR) legislature, Tsang said: "To maintain our leading
(financial) position, we must pursue further liberalization The source of
enterprises seeking to list in Hong Kong should be broadened."
His remarks appeared to address concerns expressed by some economists that
Hong Kong, currently Asia's largest listed bourse, may lose its leading position
amid a lack of new listings. Most of the mainland's largest companies have
already floated shares in the city.
Tsang's proposal also came after the mainland's yuan-dominated A-share market
rebounded after a five-year lull and is now witnessing an increasing number of
share sales, with many being launched by companies that have already listed in
Hong Kong.
Tsang called for a quick amendment of "existing listing rules to enable
well-established and qualified foreign enterprises from different parts of the
world to list in Hong Kong."
Stephen Hui, a listing committee member of the Hong Kong Stock Exchange,
supported Tsang's proposal.
The exchange "has been working in this respect for years we are now
considering relaxing the restrictions on the place of registration to lure more
global listing candidates."
Currently, only companies registered in Hong Kong, the Chinese mainland, the
British Virgin Islands and the Cayman Islands can apply to list in the city.
The rule should be changed to take into account the impact of globalization,
said Hui, who called for it to include more countries and regions such as
Australia.
"Hong Kong's equity market has long relied on H-shares and State-owned
mainland enterprises. With the maturity of the A-share market, Hong Kong may no
longer be the first priority for mainland enterprises."
Tsang also called for the establishment of a commodity futures market to
explore opportunities brought by surging demand from the mainland.
"We will conduct an in-depth study on the development of the commodity
futures market," said Tsang.
Only non-commodity products such as indexes and warrants are currently traded
in Hong Kong's futures market. Local businesses are calling on the SAR
authorities to co-operate with the mainland and allow the transaction of
commodities in the city.
Hong Kong brokers are now allowed to establish joint ventures with mainland
partners and trade futures on the mainland. Some believe a synergy could be
reached if such trading can also take place in Hong Kong.
"Hong Kong has experience in operating a futures market. It's just a matter
of time (until a commodity futures market is launched in Hong Kong)," said
Frances Cheung, an economist at Standard Chartered Bank (HK).
But she cautioned that setting up such an exchange could be a very complex
process, urging the SAR authorities to work closely on this with the central
government.
Tsang also said the Hong Kong government is fully prepared to launch two new
types of renminbi businesses import settlement and yuan bond issuance in the
city, both of which are awaiting the approval of the central government.
"Hong Kong is now experienced in RMB business after running it smoothly for
two years," he said.
As a testing ground for greater flexibility in the mainland's foreign
exchange regime, Hong Kong can now run four types of RMB transactions
remittance, deposit, exchange and credit card.
(China Daily 10/12/2006 page11)
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