HKEX’s London office to open on Wednesday with eye on European investors, global listings

Hong Kong Exchanges and Clearing (HKEX) which operates the third largest stock market in Asia, will open an office in London on Wednesday in its latest push to attract more international listings and overseas investors.

HKEX CEO Nicolas Aguzin, currently in London ahead of the opening ceremony, said the new office will strengthen ties with European investors and pitch Hong Kong as a fundraising hub to global companies.

“Enhancing our connectivity and international footprint will further drive diversity, vibrancy and ultimately liquidity in our market,” Aguzin said in a pre-recorded video released on Tuesday at the sixth annual Biotech Summit at the Connect Hall in Central, Hong Kong.

“Since the last biotech summit, we have been particularly focused on enhancing and expanding our international connectivity.”

HKEX opened its New York office in June and signed separate agreements with stock exchanges in Saudi Arabia and Indonesia to explore opportunities in the Middle East and Southeast Asia, he said.

In March, mainland China investors were allowed to trade Hong Kong-listed international stocks via the southbound Stock Connect scheme. French skincare company L’Occitane and US luggage maker Samsonite were among the first Hong Kong-listed securities eligible for trading through the scheme.

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“This enhancement means that for the first time, international companies can get direct access to China’s vast and vibrant pool of onshore investors. This is in addition to the vast pool of global investors that Hong Kong is already well known for,” Aguzin said.

“We have received several filings from biotech companies looking to benefit from this double pool of investors.”

Wuxi Biologics, China’s largest biological drugs services company, in July applied to the exchange to list its spun off international business, Wuxi XDC, via an initial public offering (IPO) in Hong Kong.

Insilico Medicine, which is based in the city, has plans for a US$200 million IPO, but its timing is yet to be finalised, sources told the Post. Sichuan Kelun-Biotech Pharmaceutical raised HK$1.26 billion (US$160.5 million) in June.

Hong Kong is the world’s second-largest fundraising hub for biotechnology after the Nasdaq and the largest in Asia, Refinitiv data shows. This came after a rule change in 2018 allowed pre-revenue biotechnology firms to list.

Hong Kong had 119 health-related listed companies as of August, which have raised more than HK$270 billion, according to co-chief operating officer Wilfred Yiu Ka-yan.

“These are biotech companies or medical companies from different backgrounds, including biotechnology, pharmaceutical, medical devices and medical services,” Yiu said. “About 60 of them have not generated any revenues yet. However, the chapter 18A allowed them to list on the Hong Kong stock exchange.”

The HKEX is now working on the launch of a new IPO platform called FINI, designed to accelerate the listing process, which is due to make its debut in October, Aguzin said.

“FINI will significantly shorten the time between the pricing of an IPO and trading of shares from five days to two days,” Aguzin said. “It also includes a pre-funding module that will release funds that have historically been tied up during this subscription period.”

Aguzin said FINI and other recent projects “will help reinforce Hong Kong’s role as a global destination for biotech and healthcare companies and investors”.

The New York and London expansions underscore HKEX’s search for diversification and new areas of growth amid stagnating new listings and turnover.

The government last week appointed former Securities and Futures Commission chairman Carlson Tong Ka-shing, now a director of HKEX, to head a task force to study ways to increase stock market activity and boost other areas of the capital market.

The average daily turnover at the exchange stood at HK$115 billion in the first half of this year, down 16 per cent from a year ago, HKEX data shows.

A total of 28 companies raised US$2.2 billion in the first half, Hong Kong’s lowest fundraising total since 2003, according to Refinitiv data.

HKEX’s London office is located at 10 Finsbury Square, which also houses the London Metal Exchange, which was taken over by HKEX in 2012, in its first overseas acquisition.