How Chinese listings and exchanges are thriving and what this means for investor relations professionals
By Leslie Fung
The stories told of China’s exchanges and listings to date have focused on Chinese firms’ appetite both for domestic listings in Shanghai, Shenzhen and Hong Kong but also on what some see as a race to list on overseas exchanges particularly the Nasdaq. China is a dynamic environment for firms that have reached the point where public market investment is sought. The HKEX is already forecasting that 2021 will be another blockbuster year with activity levels that could surpass that of 2020.
Recent news reports suggest that one of the smaller bourses on the mainland could be upgraded in order to lure US-listed Chinese firms and non-Chinese firms eager to tap one of the world’s larger capital markets. Other variants of these listings might be found when Chinese-owned firms seek their IPOs. Already the market is expecting ChemChina to float the Swiss firm, Sygenta with a potential IPO in Shanghai to be followed by a secondary listing in Hong Kong or Switzerland.
Developments are not only going to be limited to the mainland. Hong Kong has seen around US$36bn raised from secondary listings led by US-listed Chinese firms but there has also been an increased focus on the exchange in Shenzhen which is fast-cementing its role as the go-to bourse for SMEs and startups looking to raise capital. This fits into the overall Greater Bay Area project which the Chinese government announced in 2019 to link Macau, Hong Kong, Shenzhen and other cities together to create an innovation cluster that could rival places such as Silicon Valley.
With inevitable change, communications directors at firms outside of China need to consider what their strategy is when building profile in the SAR and the mainland. The historic and some might argue, simplistic, view of Hong Kong as a bridge to the rest of China is fast giving way to something far more nuanced and offering even greater opportunity. At the same time Hong Kong maintains its own exchange and financial services regulator in the guise of the Securities and Futures Commission (SFC).
Investor relations (IR) communications professionals should also be preparing themselves to articulate about the differences in accounting standards, regulatory environment and so forth in the HKSAR and the mainland, especially to institutional investors overseas.
Moreover, the scale of the market and China itself brings challenges such as how to localise content for investors in Hong Kong, the Greater Bay Area and the rest of the mainland. Approaches are also needed that reflect the way financial services professionals consume media including adapting content for social media channels such as WeChat and Baidu. These have not been part of the traditional IR communications toolkit but communications directors should be positioning themselves to take advantage of their ever-increasing popularity as a source of corporate information.
An added complexity for multi-national corporations based outside of China is how to ensure that investor relations communications tailored to the Chinese market fit within global PR campaigns and structures. Taking a siloed approached is an inefficient use of resource for multi-market players. An integrated, holistic global PR model is called for.