HKEX THE LISTING VENUE OF CHOICE FOR INTERNATIONAL … HKEX.pdfHKEX IPO and Post-IPO numbers...
Transcript of HKEX THE LISTING VENUE OF CHOICE FOR INTERNATIONAL … HKEX.pdfHKEX IPO and Post-IPO numbers...
HKEX – THE LISTING VENUE OF
CHOICE FOR INTERNATIONAL
COMPANIES
April 2016
Michael Chan
Senior Vice President
Client & Marketing Services
2
2
1 Listing in HKEX
Key Drivers of China Story from Hong Kong Perspective
Agenda
3
New Listings between 2012 - 2015
by Number of Deals
Robust Listing Activities
USD 33.5 billion raised with 138 listings in 2015
Source: HKEX (as of 31 Dec 2015)
New Listings between 2012 - 2015
by Funds Raised
47
64
33
110
76
122
13 17
28 33
38 51 69
75 84
100
113
138
0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Number of listings
2012 2013 2014 2015
5.5
11.5
5.8
21.7
13.6
29.2
0.3 0.3 2.4 7.1
7.4
16.6 18.4
20.0 20.0
25.2
28.1
33.5
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Funds Raised (US$bn)
2012 2013 2014 2015
4
Strong IPO and Post-IPO Fund Raising Capability
Top 1 globally for IPO fund-raising and top 3 globally for post-IPO fund-raising
Source: HKEX, Dealogic, WFE (as of 31 Dec 2015)
2015 Global Ranking in IPO Fund-raising
HKEX achieved top 5 place globally for 14 consecutive years
# Exchanges YTD Funds Raised
(US$bn)
1 Hong Kong (HKEX) 33.50
2 New York (NYSE) 19.61
3 NASDAQ 18.01
4 London (LSE) 17.22
5 Shanghai (SSE) 16.98
6 Tokyo 15.21
7 Madrid (MADX) 9.43
8 Deutsche Borse 7.84
9 Shenzhen (SZSE) 7.72
10 Amsterdam (Euronext) 7.71
2015 Global Ranking in Post-IPO Fund-raising
# Exchanges YTD Funds Raised
(US$bn)
1 Shanghai (SSE) 122.25
2 New York (NYSE) 117.35
3 Hong Kong (HKEX) 108.67
4 Shenzhen (SZSE) 98.43
5 Euronext 88.01
6 NASDAQ 63.98
7 Switzerland (SIX) 52.37
8 Australia (ASX) 41.78
9 London (LSE) 41.17
10 Canada (TMX) 39.16
5
Strong IPO and Post-IPO Fund Raising Capability
Top 1 globally for IPO and post-IPO fund-raising combined
Source: HKEX, WFE (as of 31 Dec 2015)
HKEX achieved top 5 place globally for 14 consecutive years
34
18 18 10
19 13 21
3 8 9
109
122 117
98 88
64 41
52 42 37
-
20
40
60
80
100
120
140
160
Hong Kong(HKEX)
Shanghai(SSE)
New York(NYSE)
Shenzhen(SZSE)
Euronext NASDAQ London(LSE)
Switzerland(SIX)
Australia(ASX)
SpanishExchanges
(BME)
US
D b
n
IPO Funds Raised Post-IPO Funds Raised
6
A Platform to Support Long-term Fund-raising Needs in a Flexible Way
Source: HKEX (as of 31 Dec 2015)
HKEX IPO and Post-IPO numbers consistently show its ability to raise funds even during 2008 Financial Crisis (Post-
IPO funds raised up to $46 billion USD)
8 15
28
36 38
67
75
54
82
110
62
39
48
120
142
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
76%
52 Follow-on 5 8 20 24 17 24 38 46 50 29
40% 47% 28% 34%
55%
64% 50%
15%
39%
53%
60% 53%
72% 66%
45%
36% 50%
85%
61%
47%
53%
47%
(US
$ b
n)
IPO and Post-IPO Funds Raised
58 IPO 3 7 8 12 21 43 37 8 32 33
31%
69%
27
12
56%
44%
27
21
■ 6 Months: Allowed time after initial listing for follow-on / secondary issues of shares or convertible securities
■ One Day: Completion driven by market demand
91
29
24% 24%
76%
109
34
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Competitive Advantages for International Listings on HKEX
Key Drivers for International Listings
Asia / China
Nexus
Alignment of
Issuers’ Growth
Drivers and
Shareholders
Diversified
and Global
Investor Base
Transparent and
Efficient Listing
Regime
Critical Mass of
World’s Leading
Brand Names
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HKEX Attracts Listed Companies of All Sizes
Source: HKEX (as of 31 Dec 2015)
Number of Companies by Sector
All Listed Companies Distribution
53
345
1216
216
0 500 1000 1500
> USD10bn
USD1-10bn
USD0.1-1bn
< USD0.1bn
Mark
et C
apitalis
ation
Number of Listed Companies
Distribution of Companies Listed
Market Cap. Main Board GEM
< USD0.1 billion 7.2% 46.5%
USD0.1 – 1 billion 68.6% 50.2%
USD1 – 10 billion 20.9% 3.3%
>= USD10 billion 3.3% 0.0%
Conglomerates, 14
Consumer Goods &
Services, 655
Energy, 77
Financials, 156 Industrials, 226
Information Technology, 185
Materials, 151
Properties & Construction ,
272
Telecom, 18
Utilities, 54
■ Total listed companies of 1,830
■ The number of Consumer Goods and Services companies are on the rise accounting for 36% of total listed companies
■ Traditional sectors (Properties & Construction and
Industrials) as well as new growth sectors (Information Technology) are well represented in the market
Sectors by Number of Companies
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Trading Value Distribution of Overseas Investors
Diverse and Growing Global Investor Base
HKEX enables access to critical mass of international institutional investor base and also Asian and Mainland Chinese investor base
Note: Numbers may not add up to 100% due to rounding
Source: HKEX Cash Market Transaction Survey 2014/2015
Trading Value Distribution by Investor Type
Exchange Participants' Principal
Trading 22%
Local Retail
Investors 20%
Local Institutional Investors
19%
Overseas Retail
Investors 8%
Overseas Institutional Investors
31%
US, 23%
UK, 27%
Europe (Excl. UK),
8%
Japan, 1%
Mainland China, 22%
Taiwan, 2%
Singapore, 8%
Rest of Asia, 3%
Australia, 1%
Others, 7%
Mainland Chinese investor exposure drives growth and synergy with international investor base participating in
HKEX markets
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59.7
Case Study – IMAX China Holding, Inc.
Source: HKEX (as of 29 Jan 2016)
Successful realization of valuation potential via spinning-off of China subsidiary
■ Listing Date: 8 October 2015
■ IPO Funds Raised: HKD2,210 m (US$283 m)
■ IPO Price: HKD 31
■ Trading Turnover Oct 2015 – Jan 2016:
HKD4,008 m (US$514 m)
■ Market Cap at listing: HKD11,015 m (US$1,412 m)
■ P/E Ratio at listing: 62.9x
IMAX China IPO Statistics
30
35
40
45
50
55
60
08/10/2015 08/11/2015 08/12/2015 08/01/2016
Share Price Changes (8 Oct 2015 – 29 Jan 2016) (HKD)
100.2
38.6
0
20
40
60
80
100
120
IMAX China IMAX Corporation (ParentCompany)
Price/Earnings Ratio as at 29 Jan 2016■ Strong post-listing performance (Oct 2015 – Jan 2016)
IMAX China price +42.77% (highest +92.58%)
Hang Seng Index -11.94%
■ Shareholders’ value enhanced as fast-growing China
business sees valuation 2.6 times higher than that of
US parent holding
59.7
49.4
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Listing Process
An issuer
decides to list
on HKEX
Appointment of
sponsors,
lawyers,
accountants
& other
professional
advisors
Restructuring,
preparation of
accountants’
report,
drafting of
prospectus
Sponsor
submits listing
application &
related
documents
to the Listing
Division of HKEX
Roadshow to
promote shares to
investors
before trading
commences Hearing by
Listing
Committee
Review of listing
application by the
Listing Division
Review and approval of
listing application
by the Listing Division
GEM Main
Board
Average Time:
5-8 weeks
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Key Main Board Listing Requirements
Financial Requirements
To fulfill any one of the following tests:
1. Profits Test
■ Net profit of latest year ≥ USD2.6 m
■ Net profit of two preceding years ≥ USD3.8 m
(in aggregate)
■ Market cap ≥ USD25.6 m
2. Market Cap / Revenue Test
■ Market cap ≥ USD513 m
■ Revenue of the most recent audited year ≥ USD64 m
3. Market Cap / Revenue / Cashflow Test
■ Market cap ≥ USD256 m
■ Revenue of most recent audited financial year
≥ USD64 m
■ Aggregate positive cash flow for 3 preceding
financial years ≥ USD13 m
Control and Management
■ Ownership continuity and control for at least the most
recent financial year
■ Management continuity for at least 3 years
Public Float
■ Minimum of 25%
■ If market cap ≥ USD1,282 m, public float can be
lowered to 15%
■ Minimum of 300 shareholders
Professional Advisers
■ Must appoint a sponsor for listing
■ Public offer tranche must be fully underwritten by
underwriters
■ Must appoint a compliance adviser for the period
from listing date to end of publication of financial
results for
1st full financial year after listing
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Key GEM (Growth Enterprise Market) Listing Requirements
Financial Requirements
To fulfill the following criteria:
Market Cap / Operating Cash Flow Test
■ Market cap ≥ USD13m (HKD100m)
■ Operating cash ≥ USD2.6m (HKD20m) in aggregate
for latest 2 full financial years
Public Float
■ Minimum of 25%
■ If market cap ≥ USD1,282 m, public float can be
lowered to 15%
■ Minimum of 100 shareholders
Professional Advisors
■ Must appoint a sponsor for listing
■ Must appoint a compliance adviser for the period
from listing date to end of publication of financial
results for
1st full financial year after listing
■ A trading record period of at least 2 full financial years
■ Management continuity for at least the 2 preceding
financial years
■ A continuity of ownership and control throughout the
full financial year immediately preceding the issue of
the listing document
Operating History and Management
■ Enhance time and cost efficiency – the power to
approve admission of new issuers will be delegated
from the GEM Listing Committee to the Listing
Division
■ A streamlined transfer process to Main Board Listing
– no need to appoint sponsor or financial advisor, no
need to produce a prospectus or listing document
only an announcement and application form would
suffice
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2
1 Listing in HKEX
Key Drivers of China Story from Hong Kong Perspective
Agenda
15
HKEX Building Investor Base – China Long-term Strategy
China’s emerging market growth potential and prospect drives HKEX listing to attract strategic investors at different
stages in fund raising
Pre-IPO Investors
Cornerstone Investors
Post-IPO Investors
IPO and Post-IPO Fund Raising Capabilities
16
Key Drivers of Hong Kong Exchange Strategy
Redeployment of Mainland wealth into
capital markets
Increasing international participation in
Mainland capital markets
2 1
Rising Mainland outbound capital
markets investment
Hong Kong’s unique position as a
mutual price discovery venue
4 3
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100
200
300
400
500
600
700
800
900
1,000
2007
2008
2009
2010
2011
2012
2013
2014
2015
3 Year CAGR of all bonds: 81%
3 Year CAGR of RMB bonds: 123%
-
50
100
150
200
250
300
350
400
450
500
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total Funds Raised (HK$ bn)
How important is
China Capital Account
Opening to Hong
Kong?
Source: HKEX (as of 30 Nov 2015)
Hong Kong Market (HKEX) has a Strong China Story
IPO Fund Raising Story Tremendous Growth of Market Cap
ADT Driven Growth for HKEX
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5.0
10.0
15.0
20.0
25.0
30.0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Market Cap of HKEX Markets (HK$ tn)
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Non-China China
ADT (HK$ bn)
Fixed Income Driven Growth for HKEX
Total Amount Issued (HK$ bn)
Non-China China Non-China China
Non-China China
How important is China Capital Account Opening to Hong Kong?
18
Trading Velocity (% Terms)
“China Story” for Domestic Mainland market
Source: WFE & HKEX as of 31 January 2016, ADT and Velocity figures of HKEX include ETF products but excludes warrants
Total Market Average Daily Turnover (ADT)
45.1
84.4
133.9 134.8
157.7
113.2
80.7
44.4
59.6 69.0
48.7
33.2
6.1 8.5 20.6
14.2 12.9 12.1 8.6 7.1 6.7 6.6 5.3 6.9
0
20
40
60
80
100
120
140
160
180
Feb2015
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2016
Equ
itie
s A
DT
(US$
bn
)
Shanghai StockExchange
HKEX
195
464
600
546
697
645
492
270 277
390
295 228
37 62
113 78 88 89
67 54 47 50 42 56
0
100
200
300
400
500
600
700
800
Feb2015
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2016
Ve
loci
ty (
%)
Shanghai StockExchange
HKEX
HKEX SHSE
• Market Cap US$ 3.5 trillion
• 80% Retail Investor Composition
• No Day Trading Allowed
• T+0 Trade Settlement
• Market Cap US$ 2.9 trillion (62% Chinese
Companies)
• 78% Institutional Investor Composition
• Day Trading Allowed
• T+2 Trade Settlement
Shanghai Stock Exchange market demonstrates strong domestic trading power that can flow into HKEX market
through southbound over time
19
= YTD average velocity = L1M velocity
Comparison of Trading Activity Across Global Exchanges
Source: WFE, as of 31 January 2016
99.5
55.8
4.5 2.0
14.0 8.4 6.2
33.2
49.3
6.9
26.1
7.1 3.0 2.6 2.1 0.8
NASDAQ BATS BM&F ENX SSE HKEx KRX NSE India SGX
66%
57%
62%
4
119%
6
186%3
110%3
71%
75%
445%
89%
228%
56% 137%
46% 69% 69%
45%
YTD ADT1 & Velocity2 of Major Global Exchanges (US$ billion)
228%
445%
56%
Notes: 1. All figures are based on single counter data from WFE
2. All figures are based on single counter data from WFE. Nasdaq and NYSE data are calculated internally based on WFE’s definition
3. The data of Nasdaq and NYSE include trades executed on their trading platforms for stocks listed on other exchanges
4. Figures of BATS are based on data from its official website and WFE
5. YTD ADT and Velocity figures include ETF products but excludes warrants
6. Data as of 31 December 2015
HKEX has the potential to substantially increase velocity as China opens its capital account
NYSE TMX LSE Deutsche SZSE TSE ASX TWSE
20
Key Features of Shanghai-Hong Kong Stock Connect
Note: Only eligible Mainland investors can participate in Southbound trading
To achieve maximum market efficiency with minimum systemic risks
Closed Loop Cross-Boundary Fund Flow to
Achieve Stringent Risk Management
Order Routing in Gross for
Maximum Price Discovery
Clearing and Settlement in Net for
Minimum Cross-boundary Fund Flow
“Home Market” Rules and Laws Apply
to the Extent Possible
All RMB Conversion in HK,
Facilitating Offset of Currency Conversion
Reciprocal Structure for Alignment of Interest
Quota Applied for Smooth and Stable Launch
Scalable in Size, Scope and Market
in the Future
Equal Revenue Sharing to
Achieve Win-win Solution
Hong Kong Shares
A Shares
Order
Routing
Cle
ari
ng
Lin
k
SSE
SEHK
So
uth
bo
un
d
Eligible Shares
ChinaClear
No
rthb
ou
nd
Cle
arin
g L
ink
SEHK
Subsidiary
SSE
Subsidiary
Order
Routing
HKSCC
Eligible Shares
EPs/CPs
Mainland
Hong Kong
SSE Members/
ChinaClear
Participants
HK & overseas
investors
Mainland
investors*
CSRC
SFC
Re
gu
lato
ry C
oo
pera
tio
n E
nfo
rce
me
nt C
oo
pera
tion
21
Client & Marketing Services
Market Development Division
Hong Kong Exchanges and Clearing Limited
Add. : 10/F One International Finance Centre
1 Harbour View Street, Central, Hong Kong
Email : [email protected]
HKEX Group Website: www.hkexgroup.com
HKEXnews Website: www.hkexnews.hk
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