Hong Kong to increase market value for tech firms

A new chapter will be added to the main board listing rules, allowing pre-commercial companies with at least HK $10 billion $1.27 billion in market value to sell shares, down from the previous threshold of HK $15 billion.

For commercial companies, a market value of no less than HK $6 billion will be required to make initial public offerings in the city, compared to the previous requirement of HK $8 billion.

READ MORE: HKEX to expand eligible stocks under Stock Connect program.

The move is part of Hong Kong's broader efforts to entice more tech firms to come to the city, and to consolidate Hong Kong's standing as a global financial center.

The new-economy sector is changing the way in which we live and work, and this new route to market will support some of the most innovative and progressive companies of the future, said Nicolas Aguzin, HKEX Chief Executive Officer.

For these pre-profit and pre-profit companies, access to capital will help fund research and development, and shape a path to commercialization, said Virginia Lee, partner of Clifford Chance Hong Kong.

The biggest picture is that it will boost the liquidity of Hong Kong's capital market and create a more competitive exchange internationally. She said that this initiative aligns with the Hong Kong government's broader efforts to strengthen the city's status as a leading global financial center.

Melody Lai, chief strategist at China Renaissance Securities Hong Kong, said: We expect Hong Kong to become a more attractive listing destination for technology-focused and growth companies. With the rising proportion of new-economy stocks, this could help to increase the overall representativeness of the Hong Kong stock market, to enjoy a valuation premium with stronger liquidity flow, to drive higher turnover, and to enhance diversity. The chief strategist said that Hong Kong will be a more convenient listing venue and preferred destination for Chinese companies American depositary receipts homecoming, as these firms can mitigate the risks associated with scrutiny from a single stock exchange, while also paving the way for them to capitalize on higher valuations and superior returns in their home market.

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According to the latest Global Financial Centres Index, which was jointly published on Thursday by London based think tank Z Yen and Shenzhen-based think tank China Development Institute, Hong Kong is fourth in the world, one place behind Singapore.

The stock price of HKEX was close to HK $342 per share on Friday.