Christina Bao, Co-Head of Sales & Marketing at the Hong Kong Exchanges and Clearing Limited (HKEX). — Photo courtesy of HKEX

The Vietnamese stock market is a key capital mobilisation channel for the economy and is undergoing improvement and upgrading towards emerging status. Considered as Asia’s financial hub, Hong Kong is a role model for Việt Nam to follow.

When Christina Bao, Co-Head of Sales & Marketing at the Hong Kong Exchanges and Clearing Limited (HKEX), came to Việt Nam for a conference, Việt Nam News reporter Ly Ly Cao took the opportunity to speak to her about solutions to enhance the country’s stock market and how Hong Kong can support Việt Nam in the upgrading process.

What do you think about the Vietnamese stock market in its current state?

Việt Nam’s economy is on very strong momentum in terms of GDP growth, which grew by more than 8 per cent last year and is hopefully to reach 6 per cent this year. This sets a very strong foundation for the local stock market to develop further.

In any country, the stock market plays a pivotal role as an engine fuelling economic growth and funding the region’s companies of tomorrow.

Each stock market has its own uniqueness and different growth objectives.

Hong Kong is located in Asia, but we are a global market, connecting global corporates with global capital on one hand.

On the other hand, we are also connecting mainland China investors and funds with global opportunities.

HKEX is in a good position to be an engine for ASEAN growth and provide key support for ASEAN companies, including Vietnamese companies, on their journey to expand their global footprint, access regional and international capital, and gain exposure to investors in China and around the world.

This time, we are here to speak with local investors, companies, and funds to introduce the latest developments in the Hong Kong market, and what HKEX can offer to connect Vietnamese issuers and investors with global and China’s capital and opportunities.

How can Hong Kong support Việt Nam in improving its securities system?

HKEX and the Hong Kong market are well positioned to connect global and China liquidity with Vietnamese opportunities.

The Hong Kong market offers a unique combination of benefits – international standing, established and proven governance and operations, deep liquidity, and transparency: all backed by a professional ecosystem, a well-tested listing regime and regulation, and an international market of issuers and investors.

Hong Kong’s market has a global investor base, which can provide strong support for the funding of Vietnamese companies – 41 per cent of cash market trading is contributed by international investors.

Once a company is listed on the Hong Kong market, it can tap into both international investors from regions such as the US, Europe, Japan, South Korea, and also mainland China investors.

We have no capital controls, meaning that international investors have great flexibility to invest in or trade in Hong Kong.

Additionally, we are connected to mainland China. HKEX’s pioneering Connect schemes allow ASEAN capital to be allocated to the under-invested onshore China market and enable Chinese investors to diversify into the ASEAN region.

The recent arrangements allowing international companies primarily listed in Hong Kong to be admitted to Stock Connect southbound trading will certainly enhance the attractiveness of Hong Kong as a listing destination.

In essence, ASEAN issuers will be able to access two uncorrelated pools of capital with a primary Hong Kong listing.

Furthermore, we adopt high-standard practices in Hong Kong in terms of shareholder protection, information disclosure, and so forth. Many companies, especially those from emerging markets, want to ensure that their overseas listing activities enhance their corporate governance and adopt best practices, for instance, ESG. Thus, these companies can derive greater benefits when they list in Hong Kong.

Which sectors do you think will attract capital in the near term?

The market today is incredibly dynamic. Hence, it's challenging to definitively state which industries will remain attractive next year or the year after, given the market's volatility.

However, I'd like to highlight a few sectors that have experienced significant growth in terms of fundraising and liquidity on HKEX in recent years.

Firstly, there's the consumer sector. Over the years, this industry has consistently performed robustly in Hong Kong, capturing substantial investor interest. It now represents 20 per cent of our market in terms of market capitalisation, trading volumes, and fundraising.

Healthcare is another prominent sector, particularly in the aftermath of COVID-19. The 118 healthcare companies have collectively raised approximately HK$270 billion, establishing Hong Kong as the second-largest fundraising hub for biotech and healthcare globally, only trailing NASDAQ.

New economy companies, encompassing areas like healthcare, clean energy, and AI, have been responsible for a significant portion of IPO funds raised in Hong Kong in the recent past. They accounted for about 65 per cent in 2022, up from 49 per cent in 2019.

Hong Kong-listed ASEAN companies had a combined market capitalisation of HK$158.3 billion at the end of June, spanning various sectors. This includes consumer (65 per cent), property & construction (17.8 per cent), industrials (9.5 per cent), information technology (3.2 per cent), healthcare (2.2 per cent), and others (2.3 per cent).

Looking ahead, we foresee ample opportunities in the region, notably among Internet and tech companies in Southeast Asia and international biotech enterprises. — VNS