Shares in Hong Kong Exchanges & Clearing notched their sharpest daily rise in five years on Tuesday, making it the world’s most valuable bourse, after Alibaba’s payments arm announced plans to sell shares in the city.
HKEX’s stock finished 9.8 per cent higher and was the best-performing member of the city’s benchmark Hang Seng index, which closed up 2.3 per cent.
The gains marked the biggest one-day rise since July 2015, when Hong Kong was benefiting from a surge of trading volumes spilling over from mainland China.
The almost 10 per cent jump pushed HKEX’s market capitalisation to $62bn, surpassing Chicago-based CME by about $2bn and making it the world’s number one exchange operator by that measure. HKEX last enjoyed that status in the spring of 2015, not long after it had been linked to China’s onshore market via a stock connect scheme.
Tuesday’s gains came after Ant Group, China’s most popular mobile payments company, confirmed plans for a dual listing on Hong Kong’s bourse and Shanghai’s tech-focused Star board.
The offering will be the latest in a series of placements from Chinese tech groups that are reshaping the city’s stock exchange, helping to cushion the blow after the US revoked Hong Kong’s special trade status this month in response to a national security law imposed by Beijing.
“The [Ant] listing itself is going to increase the attractiveness of listing on HKEX”, said Michael Wu, a senior equity analyst at Morningstar.
Analysts last year had suggested China’s decision to launch the tech-focused Star board in Shanghai might divert listings from Hong Kong’s exchange, which enjoys a monopoly on all stock, bond, futures and derivatives trading and clearing in the former British colony.
But Brock Silvers, Hong Kong-based chief investment officer of Adamas Asset Management, said the dual listing “serves a dual purpose”, allowing Ant to raise money offshore while also still complying with China’s political preferences.
“Beijing desires a higher level of control over ‘offshore champions’ while the companies desire continued access to [offshore] capital”, Mr Silvers said. “HK-Star dual listings seem to meet both criteria.”
This year Chinese companies with listings in the US have raised billions of dollars through secondary listings in Hong Kong, partly in response to proposed US legislation that could force them to delist from New York’s exchanges for failure to comply with American accounting and auditing standards.
Mr Wu at Morningstar added that gains across the board on Tuesday for top Chinese tech names such as Alibaba, Tencent and JD.com reflected a shift away from the financial and real estate stocks that have long dominated Hong Kong’s stock market.
In May, the compiler of Hong Kong’s Hang Seng index said it would for the first time allow secondary listings and stocks with unequal voting rights — features of China’s tech sector — to be added to the Hang Seng benchmark.
And on Monday. Hang Seng Bank’s index subsidiary announced the creation of a new index tracking 30 of the largest tech companies. The company noted that the benchmark would have risen 35 per cent over the first six months of 2020 and 36 per cent in the whole of 2019 — much better than the Nasdaq 100 this year, and only slightly worse last year.
The new index, due to launch by the end of the month, was “creating a lot of excitement in the market,” said Frank Benzimra, head of Asia equity strategy at Société Générale.
He added that there were at least another five Chinese tech companies listed in the US that could decide to carry out secondary placements in Hong Kong.
Additional reporting by Philip Stafford in London