Chan lifts hopes with brighter prospects on horizon for Hong Kong economy
- An upbeat assessment by Hong Kong’s financial secretary on initial public offerings to investment and attracting talent augurs well for city’s recovery
To say that Hong Kong’s recovery from the pandemic has been tenuous may sound too generous. The market for initial public offerings is off to a rockier start than last year, which was hardly great.
Stock markets spent early 2024 in the doldrums before turning bullish in the spring. The mainland economy, hobbled by its property sector, has not come to the rescue.
Even so, criticism that the city’s government has had few ideas to revive the economy is misplaced. Recovery takes time and indeed a plan is being followed that is slowly getting the economy back on its feet.
Financial Secretary Paul Chan Mo-po this week outlined government efforts on many fronts, opening with a welcome prediction that markets will see a substantial number of IPOs, starting in the third quarter. “At the moment, in the pipeline, IPOs coming to Hong Kong are very strong,” Chan said.
That is good news if they materialise. Hong Kong ranked first in the world on the global IPO league table for seven out of the past 15 years.
Last year, it limped in at sixth place, raising US$5.7 billion as the sluggish economy and moribund markets delayed listing plans. Interest rates at 17-year highs have not helped.
With the prospect of a rate cut in mid-September, some are testing the market. The city’s exchange has received 100 applications this year, the pace picking up since April after the mainland regulator gave its clear blessing to offshore listings.
Proceeds are set to rise by 35 per cent for the year.
Chan, who recently returned from a trip to Silicon Valley to sell the city’s strengths as a place to do business, is heading to Australia in September on another tour to promote investment opportunities. The government’s investment vehicle, the Hong Kong Investment Corporation with a HK$62 billion war chest, was screening more than 100 companies hoping to develop business in the city, he said.
The corporation aims to generate a return on investment and attract the right firms.
The Oases office, set up by the government to develop innovation and hi-tech, saw 49 enterprises from China and the United States sign up by March. Additionally, programmes are attracting talent from the mainland and overseas, and a seemingly endless calendar of mega-events is scheduled through the year end and beyond.
The economy is so fundamentally tied to the mainland it will continue to be tough going. But Chan has offered greater clarity on the road ahead and plans to zealously pursue opportunities overseas.
Importantly, authorities need to be more nimble than rivals, and learn from setbacks such as snubs by leading musical acts and some IPOs, or having star footballer Lionel Messi sit out a whole match on the bench. But with signs of both progress and prospects, there is hope for the economy yet.
Hongkongers are counting on it.
