Factbox: Major finance milestones as Hong Kong marks 25 years since handover

Greater Bay Area Dynamic Growth Holding

28/06/2022 04:47

HONG KONG, June 28 (Reuters) - Hong Kong returned to China
in 1997 after 156 years of British colonial rule. Here are some
major milestones for the city's financial markets:

HONG KONG DOLLAR TRADING BAND
The Hong Kong dollar was pegged to the U.S. dollar on October
17, 1983, with a trading band of between 7.75 and 7.85 per US
dollar imposed since 2005. The Hong Kong Monetary Authority
(HKMA), the city's de-facto central bank, regularly enters the
market to buy or sell the currency to keep it within the band.
      
DUAL HONG KONG AND MAINLAND LISTINGS
Industrial and Commercial Bank of China  601398.SS  became the
first company to execute an IPO simultaneously in Shanghai and
Hong Kong in 2006 when it issued A-shares and H-shares to raise
US$21.9 billion, the largest deal in the world at the time. 
    
STOCK, BOND AND WEALTH CONNECT
Shanghai-Hong Kong Stock Connect was created in 2014 to provide
mutual access between the equity markets of Hong Kong and
mainland China. Two years later, the programme was expanded to
Hong Kong and Shenzhen Stock Connect, which allowed mainland
investors access to smaller companies in Hong Kong and
international investors access to new economy companies listed
in Shenzhen. The connect programmes now cover about 2000 stocks,
according to Hong Kong's Securities and Futures Commission
(SFC). In May, China's securities regulator agreed to include
exchange-traded funds (ETFs) in stock connect programmes with
Hong Kong.  urn:newsml:reuters.com:*:nP8N2WQ0D0
    
    In 2017, Bond Connect was launched to replicate the equity
schemes and allow foreign investors to invest via Hong Kong in
China's multi-trillion bond market. The Northbound Bond Connect
has become a major channel for foreign investors seeking access
to China's bond market. In September last year, China said it
would permit its investors to trade offshore debt with the
opening of the "Southbound" leg of its Bond Connect channel.
 urn:newsml:reuters.com:*:nL1N2QH0MP
    
    Wealth Management Connect launched in September 2021,
linking China's southern province of Guangdong with Hong Kong
and Macau, to allow cross-border funds management. The programme
enables residents of Hong Kong and Macau to buy mainland
investment products sold by banks in the Greater Bay Area, while
allowing residents of nine Guangdong cities to buy those sold by
banks in the two offshore centres.  urn:newsml:reuters.com:*:nL1N2QC0L0
    
    
    WEIGHTED VOTING RIGHTS
    Hong Kong Stock Exchange announced in 2018 https://www.reuters.com/article/uk-hkex-regulation-idUKKCN1G70VS
 it would allow companies with dual-class shares – or weighted
voting rights – if they are considered to be "innovative", in a
move designed to facilitate listings from emerging business
sectors. The decision was described by the law firm Skadden as
the most significant change to Hong Kong's listing rules in 20
years. 
        
    WAVE OF SECONDARY LISTINGS
    The weighted voting rights changes in 2018 prompted a wave
of secondary - or homecoming listings - which kicked off with
Alibaba Group in November 2019. The Jack Ma-founded e-commerce
giant raised $12.9 billion in the deal that was the largest
share sale in Hong Kong at the time for nine years. Since then,
18 companies have raised $42.3 billion, according to Refintiv
data. The pace of homecoming listings has remained strong as
Chinese companies trading in New York prepare contingency plans
as U.S authorities press ahead with delisting firms that don't
meet regulators' auditing requirements.  urn:newsml:reuters.com:*:nL3N2WX0JM

    FUTURES
    HKEX launched its MSCI A-share index futures product in
2021, an attempt to meet demand from investors in Chinese stocks
for hedging tools at a time of surging volatility.  
 urn:newsml:reuters.com:*:nL1N2RF05A  
    SPECIAL PURPOSE ACQUISITION CORPORATIONS (SPACs)
    Hong Kong Stock Exchange allowed Special Purpose Acquisition
Corporations (SPACs), known also as blank cheque companies, to
start trading from January 1, 2022, in line with most other
major markets in the world.  
    However, tight restrictions on the type of investors which
could buy into the SPACs and banning retail participation dented
demand for the products along with the current bout of market
volatility. 
    Only two SPACs have listed since the start of the year.
 urn:newsml:reuters.com:*:nL1N2T20JU

 (Reporting by Scott Murdoch; Editing by Anne Marie Roantree and
Gerry Doyle)
 ((Scott.Murdoch@thomsonreuters.com;))