Hong Kong: An ideal listing destination for Middle East companies

Strategic location, global investor base and robust legal framework

HONG KONG, Dec 20, 2023 - (ACN Newswire) - Hong Kong is an ideal listing destination for Middle East businesses, according to a new joint report by the Hong Kong Trade Development Council (HKTDC) and CCB International Capital Limited (CCB International). The report, which is released today, shows that many companies in the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) see the city as their first choice when it comes to securing funding, building stronger ties with Asia (particularly China), and, ultimately, enjoying greater global recognition.^

In order to explore the potential for UAE and KSA companies to secure listings in Hong Kong, the HKTDC and CCB International renewed their collaboration [1] to deliver the new report - Hong Kong: An Ideal Overseas Listing Venue for Middle East Companies. This led them to share a series of insights from in-depth interviews with UAE and KSA industry experts and practitioners as to Hong Kong's suitability as a listing destination for Middle East companies. The research, which was conducted from June to October this year, concluded that several Middle East business sectors in particular - Energy and Renewable Energy, Healthcare and High-tech, Infrastructure, and Finance - had the most to benefit from a Hong Kong listing.

Commenting on the significance of the findings, Irina Fan, Director of HKTDC Research, said: "For those Middle East companies looking to expand in the region, access to Hong Kong's diverse pool of international institutional investors will clearly be of huge benefit. This is especially the case as many such investors have an in-depth understanding of both the pan-Asia and China-specific opportunities now emerging." She adds, "Another plus point is the impressive breadth and depth of the Hong Kong stock market. The high level of trading activity that underpins this is a clear indication of just how robust the city's capital market has proven over the long-term."

Michelle Pan, Head of Corporate Finance & Capital Market Services at CCB International, said: "Following the visits of President Xi and HKSAR Chief Executive John Lee to the Middle East over the past two years, the Hong Kong capital market has begun exploring opportunities for collaboration between Middle East companies and the Hong Kong financial markets. In this context, this all-rounded research paper has been developed to explain why Hong Kong, with its unique attributes, is an ideal listing and fund raising destination for Middle East enterprises. The paper provides a comprehensive analysis of the benefits of listing in Hong Kong, including access to a deep pool of capital, a world-class regulatory framework, a vibrant and dynamic business environment, and a gateway to the vast Chinese market."

Middle East: Looking at opportunities in new markets

Middle East stock exchanges have witnessed record-breaking initial public offerings (IPOs) in recent years, with bourses in KSA and UAE all ranking among the world's top 10 in 2022 in terms of IPO funds raised. The opportunities stemming from overseas listings, primary, dual-primary and secondary included, however, have yet to be fully exploited.

At present, many UAE and KSA companies are actively looking at opportunities in new markets and seeking funding via equity markets as they look to deliver on their global expansion plans, many of which align with the region's commitment to economic diversification as it looks to move on from its traditional dependence on its oil and gas resources. A clear synergy, however, has become apparent between the region and fast-growing Asia, something seen as offering tremendous opportunities for many UAE and KSA businesses as they look to make good on their economic diversification aspirations.

For many UAE and KSA companies, pursuing an overseas listing is not only a way of financing their overseas expansion projects, but also an effective marketing channel as they look to enhance their global recognition and improve their visibility and credibility among clients, institutions and the investing public in a number of target markets.

Hong Kong advantages: location, rule of law, impressive market breadth and depth, global investor base

During the course of the research, interviews with a number of experts highlighted the unique benefits on offer to Middle East companies that look to list in Hong Kong, one of the world's most highly regarded financial centres. Strategically located at the gateway to many of Asia's major markets - most notably mainland China and the ASEAN bloc - Hong Kong has considerable appeal for UAE and KSA companies. Most notably, a Hong Kong listing will ensure such businesses can fully leverage the advantages of the city's strategic location, while gaining access to its well-established networks and stable business environment and benefitting from its rule of law and its abundant talent pool, which is widely seen as capable of delivering the highest quality of professional service. The city's unique advantages also extend to the absence of capital controls and a transparent, resilient Linked Exchange Rate System.

Hong Kong's robust legal framework - something that Middle East companies value particularly highly - is a significant advantage and an essential part of its appeal as a listing destination. As the only common law jurisdiction within China, Hong Kong and its legal system has a proven track record of upholding the rule of law and of maintaining judicial transparency. This framework has long functioned as a guarantee of the fundamental rights of any global enterprise or investor looking to raise or allocate funds as part of a Hong Kong-based listing initiative.

In addition, Hong Kong's stock market has long been renowned for its maturity, vibrancy and global connectivity, while its sizeable market capitalisation consistently sees it rank among the top 10 largest stock markets on a global basis. As to its diverse investor pool, according to the Securities and Futures Commission, overseas and Mainland China investors accounted for 64% of the asset and wealth management businesses in Hong Kong in 2022, with the majority of overseas investors coming from North America (23%), Australia, New Zealand and elsewhere in the Asia Pacific region (14%), all of which instilled substantial liquidity in the local equity market.

As to how Hong Kong can optimise its role as a premium listing hub for Middle East companies, the research emphasised the importance of strengthening and sustaining its connectivity with many Middle East countries, especially at the government and regulatory level.

Overall, building closer G2G relationships with many Middle East economies was seen as of paramount importance, with the countries' respective governments seen as playing a significant role in steering the relevant business sectors. It was also recommended that a higher level of market promotion and investment education be undertaken with regard to many Middle East prospects as a means of nurturing and directing their interest in Hong Kong's financial services resources.

^ The first research report focuses on the overall overseas listing regime of Hong Kong as well as Hong Kong as a listing destination for UAE companies, while the subsequent report on KSA companies listing in Hong Kong will be released in the first quarter of 2024.

[1] HKTDC and CCB International released a research report on "Hong Kong: The Most Popular Overseas Listing Venue for ASEAN Companies" on 27 May 2022.

Photo download: https://bit.ly/41r9Q2a

"Hong Kong's substantial investor pool has unrivalled understanding of both the pan-Asia and China-specific opportunities now emerging, guaranteeing a level of insight that will be invaluable to any ambitious Middle East business." Irina Fan, Director of HKTDC Research

"Listing in Hong Kong provides Middle East companies with a range of benefits, including access to a deep pool of capital, a world-class regulatory framework, a vibrant and dynamic business environment, and a gateway to the vast Chinese market. This makes Hong Kong an ideal destination for Middle East enterprises seeking to expand their global reach and access new opportunities." Michelle Pan, Head of Corporate Finance & Capital Market Services, CCB International

Hong Kong is an ideal overseas listing destination for Middle East companies, according to a research report by the Hong Kong Trade Development Council (HKTDC) in collaboration with CCB International

References
HKTDC Research Portal: https://research.hktdc.com/en
"Hong Kong: An Ideal Overseas Listing Venue for Middle East Companies": https://bit.ly/3RJWo6c

Media Enquiries
HKTDC's Communications & Public Affairs Department:
Frankie Leung, Tel: (852) 2584 4298, Email: frankie.cy.leung@hktdc.org
Clayton Lauw, Tel: (852) 2584 4472, Email: clayton.y.lauw@hktdc.org

CCB International's Corporate Finance & Capital Market Services:
Sam Siu, Tel: (852) 3911 8926, Email: samsiu@ccbintl.com

About HKTDC

The Hong Kong Trade Development Council (HKTDC) is a statutory body established in 1966 to promote, assist and develop Hong Kong's trade. With 50 offices globally, including 13 in Mainland China, the HKTDC promotes Hong Kong as a two-way global investment and business hub. The HKTDC organises international exhibitions, conferences and business missions to create business opportunities for companies, particularly small and medium-sized enterprises (SMEs), in the mainland and international markets. The HKTDC also provides up-to-date market insights and product information via research reports and digital news channels. For more information, please visit: www.hktdc.com/aboutus. Follow us on Twitter @hktdc and LinkedIn

About CCB International

CCB International (Holdings) Limited and its subsidiaries (collectively "CCB International") is a financial and investment services company owned by China Construction Bank Corporation ("CCB"). CCB International is committed to expanding its international platform. Backed by the CCB global network, its business covers key financial centres worldwide including Mainland China, Hong Kong, Singapore and London. CCB International offers a full range of products and services including sponsoring and underwriting, financial advisory, corporate mergers and acquisitions, restructuring, additional issuance and placement of shares, refinancing for listed companies, direct investment, asset management, securities brokerage, market research, investment consultancy and commodities business. The corporate finance and capital market services of CCB International have assisted hundreds of companies in raising over HK$5 trillion from the global capital market. For more information, please visit: https://www.ccbintl.com.hk/English/company.html

Disclaimer: The information contained herein merely reflects the author's own beliefs about the country concerned and the relevant economic situation. This information does not constitute or form part of any offer, solicitation or invitation to subscribe or purchase any securities. CCB International and the HKTDC do not guarantee, represent and warrant that all or any part of this information is reliable, accurate or complete.

If this document has been distributed by electronic transmission, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. CCB International and the HKTDC, therefore, do not accept liability for any errors or omissions in the contents of this document, which may arise as a result of electronic transmission.