For the primary time, Hong Kong’s chief has welcomed Saudi Arabian elites to town for an funding convention, in an instance of how it’s embracing new potential enterprise companions because it confronts a slumping economic system and geopolitical uncertainty.
In opening remarks on Thursday, Hong Kong Chief Govt John Lee known as the gathering “yet one more important step ahead, within the deepening [of] ties between Hong Kong and the Center East, notably the Kingdom of Saudi Arabia.”
The 2-day occasion was organized by the Hong Kong authorities, its inventory trade and the Future Funding Initiative (FII) Institute — a nonprofit based by the Public Funding Fund (PIF), Saudi Arabia’s sovereign wealth fund. The institute hosts an annual occasion in Riyadh dubbed “Davos within the Desert.”
Hong Kong has aggressively courted Saudi Arabia for extra enterprise this 12 months as it really works to hedge in opposition to US-China tensions, which have led to the better threat of Western corporations decreasing their operations within the semi-autonomous Chinese language metropolis, mentioned Willy Lam, senior China fellow of the Jamestown Basis, a US assume tank.
He known as the summit “a shot within the arm” for Hong Kong’s economic system, which he says has suffered from an exodus of international expertise, decline in property costs and drop within the variety of international corporations utilizing town as a regional base in recent times.
“Saudi Arabia could possibly be a giant prize for Hong Kong,” given the scale of its economic system and trusted allyship with China, in response to Lam. Final 12 months, the 2 international locations signed a strategic partnership agreement.
George Chan, a Shanghai-based international IPO chief for EY, additionally mentioned the summit was a method for Hong Kong to advance its purpose of “diversifying” its financial partnerships amid advanced international challenges.
“Moreover, as geopolitics prompts Center Jap international locations to diversify investments, Hong Kong is a perfect vacation spot given its power in bridging mainland China, Asia, and international capital flows,” he informed CNN.
Officers in Hong Kong have good cause to be casting a wider internet. Within the face of a global slowdown, town is struggling a drought of preliminary public choices (IPOs).
Its IPO market is at the moment within the midst of its worst 12 months since 2003, in response to information supplier Dealogic, with just below $4.6 billion in proceeds raised as of early December.
The federal government is working to alter that. In February, Lee traveled to Riyadh, the place he met with the CEO of state-owned oil firm Saudi Aramco, the world’s third most useful firm, and floated the thought of an inventory in Hong Kong, in response to a authorities statement.
Aramco went public in Riyadh in 2019, in what was then the biggest IPO of all time. Chan mentioned “a blockbuster Aramco providing may spark a Hong Kong IPO reawakening, positioning town because the gateway of selection bridging Center East titans and Asian ambitions longer-term.”
PIF Governor and FII Institute Chairman Yasir Al-Rumayyan, who additionally serves as chairman of Aramco, didn’t point out the prospect of a secondary itemizing on Thursday.
Requested in regards to the matter throughout an interview with CNN’s Marc Stewart on Thursday, Laura Cha, chair of the Hong Kong inventory trade, mentioned she couldn’t touch upon particular person corporations, although “we have now a wholesome pipeline.”
Hong Kong’s bourse has made it simpler for such an inventory to occur. In September, it added the Saudi inventory trade to its checklist of acknowledged exchanges, allowing Saudi-listed corporations to use for a secondary itemizing within the metropolis.
Final week, Hong Kong additionally introduced what it billed as Asia’s first exchange-traded fund (ETF) to trace Saudi Arabian equities, permitting traders to simply purchase shares within the Gulf nation’s largest listed corporations.