• to promote joint socio-economic development in Hong Kong and Guangdong;
• to enhance Hong Kong’s position as an international financial centre and expedite the development of financial-services industries in Guangdong;
• to capitalize on the competitiveness of Hong Kong’s service industries and Guangdong’s manufacturing industries to build an advanced global manufacturing and modern services base;
• to facilitate the flow of key factors such as people, goods, information and capital across the boundary, with a view to building an international aviation, shipping and logistics hub and a world-class modern economic circulation sphere;
• to implement a regional ecology and environment protection regime operating at a leading level by the national standards; and
• to promote collaborative development among Hong Kong and the Pearl River Delta cities to form a world-class metropolis cluster.

To achieve the objectives, Hong Kong and Guangdong have put forward specific policies and measures, and set out major initiatives for 2010.

According to the HKEx Chairman Ronald Arculli, it is part of HKEx’s three-year strategic plan to have more international companies to list in Hong Kong and establish the city as an international financial centre. He said mining and resource companies from South America and Africa like Brazil and Nigeria could benefit from proposed improvements in the HKEx rules to make it easier for them to list in Hong Kong. Meanwhile, companies come to list in Hong Kong can tap funds from Asian investors through HKEx, and get closer to the Mainland China and Asian markets, which are the fastest-growing in the world. Since 1993, more than 300 Mainland China firms have listed in Hong Kong, representing 58 per cent of the bourse’s market capitalization.

HKEx ranked Number 1 globally in 2009 for IPO fundraising (US$31.3 billion), and Number 4 globally in terms of total fund raised, including post-IPO, of US$81.4 billion. A total of 73 companies were newly listed on HKEx and they included overseas companies which have listed their Greater China related business operations in Hong Kong. “Companies are attracted to list in Hong Kong to benefit from our market’s liquidity, attractive valuations and access to investors in Asia,” said Professor Chan.

2010 has already started off well, Professor Chan said at the PDAC Seminar in March on “Listing and Capital Raising in Hong Kong for Mining and Natural Resources Companies”, with SouthGobi Energy Resources, owned by Canada’s Ivanhoe Mines, raising USD$439 million through a secondary listing on the HKEx, just days after Russia’s UC Rusal, the world’s largest aluminium producer and the first ever non-Asian company to have a primary listing in Hong Kong, raised USD$2.24 billion.

It is expected that at least nine other foreign mining companies will be listing in HKEx this year, said the Secretary, some of which are from Canada. Professor Chan encouraged Canadian natural resources companies in particular to list on the HKEx so as to take advantage of China’s seemingly insatiable appetite for raw materials, as well as the liquidity afforded by the Mainland’s wealthy, upper and middle-class who are very active investors on the HKEx. He pointed out that companies incorporated in British Columbia and Ontario are acceptable for listing in Hong Kong and that HKEx has adopted international standards and practices to facilitate dual listings, with no capital controls and no capital reporting requirements.

But market liquidity is only one reason why Hong Kong is the financial centre of choice by Asian companies seeking to raise capital, including over 520 Mainland enterprises having a total market capitalization of over C$1.3 trillion. Hong Kong has always been an important gateway to China and close cooperation between the two, such as with the Closer Economic Partnership Arrangement (CEPA) and a variety of specific projects with Guangdong Province and the Pearl River Delta Region to enhance financial products, capital and talent, further strengthen Hong Kong’s intermediary role.

“With a highly open and international financial platform and the unique advantage under the ‘One Country, Two Systems’, Hong Kong is best positioned to serve as a gateway to China to capitalise on China’s growth,” Professor Chan said. Investors have a fair and open playing field in Hong Kong which attaches great importance to corporate governance and transparency in maintaining a high quality market.

Hong Kong has also weathered the financial tsunami better than most of the world’s countries and the government is cautiously optimistic that 2010 will bring continuing improvement. The job market and overall economic performance both indicate that Hong Kong’s economy has shown great resilience in the face of external economic shocks. Residing next door to the world’s strongest economy, Professor Chan said, Hong Kong provides an abundance of business opportunities. For, despite the world recession, China’s economy still grew at astounding 8.7% in 2009 and will reach 10% in 2010. Now is the time, he said, for Hong Kong and Canada to ride the wave of a rising China.

Immediately upon his arrival in Toronto, the Secretary for Financial Services and the Treasury delivered a keynote speech at the Confederation of Greater Toronto Chinese Business Association annual gala “Oriental Fantasia – Hong Kong and Shanghai”. He told the 700 guests there that “Hong Kong and Shanghai serve different financial markets,” and both have different skill sets and are at different stages of development.

“We look forward to co-operating with Shanghai to exploit our relative strengths, share our experiences and maximise the synergy between us in becoming the twin engines of growth for our nation,” Professor Chan said.

The Secretary also spoke on “China’s Rise as an Economic Power” at the Rotman School of Management of the University of Toronto during his whirlwind visit. He reminded his audience that “the new wave of financial globalisation has brought a new wave of financial talent to Asia, and to Hong Kong.”

“As countries in the West continue to grapple with the aftermath of the financial tsunami, Asia is rebuilding, refocusing and rebounding,” Professor Chan said. “Hong Kong is a vantage point, actually the best available platform, for seeking out the best opportunities in China and throughout Asia.”

Speaking at the Hong Kong Denmark Joint Conference on Nanomedicine and Synthetic Biology at Hong Kong Science Park, Mr Pescod said the conference marked a step towards closer collaboration on science and technology as a direct result of the collaboration agreement on science and technology signed by Hong Kong and Denmark in May 2009.

“Under the agreement, biotechnology and medical life science, nanotechnology and advanced materials, solar energy and energy efficiency were identified as areas where our initial collaboration efforts are most likely to bear fruit,”  he added.

Deputy Director General, Danish Agency for Science, Technology and Innovation of the Ministry of Science, Technology and Innovation, Mr Hans Muller Pedersen, said the co-operation agreement was an important point to enhance the exchange of knowledge between Hong Kong and Denmark.

As a follow-up to this agreement, the Hong Kong and Danish governments have jointly organised the conference to explore the latest issues in the development of nanotechnology and synthetic biology. 

The conference was part of a three-day exchange programme jointly organised by the Innovation and Technology Commission and the Danish Agency for Science, Technology and Innovation of the Ministry of Science, Technology and Innovation to take forward the Memorandum of Understanding.

Under the programme, a business matching event was held March 12 to bring together biotech companies from Hong Kong and Denmark to explore opportunities for business and technology co-operation.  Mr Pescod said Hong Kong’s scientific contributions in genomic projects, and the identification and characterisation of emerging infectious diseases with special reference to the work on SARS and the avian flu virus, were widely acknowledged by the international research community.  He noted that in recognition of Hong Kong’s  scientific achievements and research prominence, the Ministry of Science and Technology of the People’s Republic of China had approved the establishment of a total of 12 Partner State Key Laboratories in five local universities.

The State Key Laboratories serve as the national base for the highest level of research and development as well as catalysts for scholarly exchange. Mr Pescod said,  “Hong Kong also has two excellent medical schools rated among the best in the world in the field of clinical medicine.”  He said, “Our nanotech research is equally competitive. Indeed, it is a little known fact that Hong Kong is the birthplace of the world’s smallest single walled carbon nanotubes.”

Mr Pescod said that the Government had set up a $5 billion Innovation and Technology Fund, which had supported over 200 biotechnology and nanotechnology projects, with funding commitment close to $760million. Another major source of research funding for nanotechnology, biology and medical research is the Research Grants Council, which emphasises basic and upstream research. In 2009/2010, the Council awarded over $166 million to 171 biology and medicine-related research projects.

Speaking at a seminar on “Listing and Capital Raising in Hong Kong for Mining and Natural Resources Companies” of the Prospectors and Developers Association of Canada Convention (PDAC 2010), Professor Chan said Hong Kong could serve as the financial gateway for Canadian companies to reach the Asian market in the same way that Canada served as a gateway for Hong Kong companies to invest in the North American market.
 
He called on Canadian companies to consider listing in Hong Kong to tap the local liquidity pool, quoting the examples of British Columbia and Ontario of Canada which are overseas jurisdictions already accepted by the Hong Kong Exchanges and Clearing Limited (HKEx).

“At the same time, companies listed in Hong Kong and other Asian markets can also consider a listing on the Canadian exchange to tap the liquidity there. We would also welcome Canadian fund management companies to market their services to Asia through Hong Kong,” he added.
     
Turning to market regulation, he said Hong Kong believed in being predictable and consistent in regulation, and had been careful in striking a balance between the goals of having a quality market and being market friendly.

Using the HKEx as an illustration, he said listing decisions were made by a committee of market professionals who applied their expertise in reviewing listing applications in a dual filing system overseen by the securities regulator.

He described such regulatory environment in the listing process as  working well.  “The HKEx has full control over its development strategy, and it has responded to market needs. The efficiency and quality of the listing process are further ensured with the regulatory oversight,” he added.

In 2009, Hong Kong was the most active market for IPO funds raised globally.  Hong Kong ranked number one globally in IPO fund raised for 2009 (US$31.3 billion), and number four in the world in 2009 in terms of total fund raised (including post-IPO) of US$81.4 billion.  A total of 73 companies were newly listed on HKEx and they included overseas companies which have listed their Greater China related business operations in Hong Kong.

“Earlier this year, we saw the first Russian company listed on our stock market, and I am confident that more foreign based companies will be looking to list on the Hong Kong stock exchange in the near future,” he added.

In the afternoon, Professor Chan also spoke at the Rotman School of Management, University of Toronto, on “China’s Rise as an Economic Power – Implications for HK, Canada and the Rest of the World”.

He told his audience that the new wave of financial globalisation has brought a new wave of financial talent to Asia, and to Hong Kong, and that as countries in the West continued to grapple with the aftermath of the financial tsunami, Asia was rebuilding, refocusing and rebounding. 

He said financial and trade experts not only looked to Hong Kong for future growth potential these days, they were also based right in Hong Kong which was a vantage point and actually the best available platform for seeking out the best opportunities in China and throughout Asia.

The economy improved further and resumed year-on-year growth of 2.6% in the fourth quarter, led by strong domestic demand and improving external sector.  For 2009 as a whole, GDP fell by 2.7%.  The outlook for 2010 is cautiously optimistic.  GDP is forecast to grow by 4% to 5% in 2010, with headline and underlying consumer price inflation forecast at 2.3% and 1.5% respectively.

The economy continued to recover on entering 2010.  Merchandise exports rose notably further in January by 18.4% in value terms over a year earlier, while headline inflation remained modest at 1.0%.

Hong Kong’s  Financial Secretary, Mr John C Tsang, the Secretary for Commerce and Economic Development, Mrs Rita Lau, and the Permanent Secretary for Commerce and Economic Development (Commerce, Industry and Tourism), Miss Yvonne Choi, witnessed the signing of the co-operation agreement by the Commissioner of Customs and Excise, Mr Richard Yuen, and the Vice Minister of the General Administration of Customs, Mr Sun Yibiao.

Speaking at the signing ceremony, Mrs Rita Lau said that against the backdrop of growing demand for wine on the Mainland, Hong Kong’s zero wine duty policy and favourable business environment helped create room for wine traders in the territory to tap the Mainland market.  She also made reference to the large number of Mainland tourists visiting the city, who might buy in Hong Kong fine wines from different parts of the world.

She said that the signing of the agreement would enhance co-operation between the Hong Kong and Mainland Customs on wine-related matters, and fortify Hong Kong’s position as a regional wine trading and distribution hub.

“We are very grateful to the General Administration of Customs for their support.  The measures to be put in place will help enhance transparency and certainty in doing business, thus facilitating Hong Kong’s wine traders who wish to expand their operations on the Mainland,” Mrs Lau said.

The facilitation measures are open to registered traders.  The Trade and Industry Department (TID) will handle registration for Hong Kong traders while the Mainland Customs will deal with the registration of Mainland traders.  Participation in the registration scheme is voluntary.

Companies that have been set up in Hong Kong for no less than six months and are engaged in wine-related businesses (such as trading, storage and logistics) are eligible to seek registration.

The gist of the facilitation measures is as follows:

(a)  pre-valuation of wine duty: registered wine traders may request  Mainland Customs to do valuation of wine duty 10 working days before the shipment is exported from Hong Kong to the Mainland.  When the shipment arrives at a Mainland boundary point, Mainland Customs will normally complete the procedure within one working day; and

(b)  expediting the clearance process at Mainland ports: for registered wine traders who do not choose to make use of the wine duty pre-valuation service, Mainland Customs will strive to shorten the clearance time at the Mainland boundary points.  For wines which have been imported into the Mainland before, with the submission of all the necessary documents, the clearance procedure will normally take no more than three working days.  For wines which are new to the Mainland market, the clearance procedures will usually be completed within seven working days.  If customs clearance cannot be completed within the said timeframe, the goods may still be released for sale on payment of a guarantee deposit.  This enables traders to sell their wines as soon as possible.

The governments on the two sides will publish the list of registered traders respectively on their websites.  Both the TID and  Mainland Customs will also set up their own hotlines to answer enquiries from wine traders about details of the facilitation measures.  Registered traders may also directly contact Mainland Customs through its hotline if their wine shipments encounter customs clearance problems on the Mainland.

The TID will announce details of the registration scheme through circulars and briefings later.

The facilitation measures are due to be implemented as a pilot in Shenzhen in the second quarter of this year.  After trying out the measures for six to nine months, the two sides  will review the situation and consider extending the scheme in phases to other major Mainland cities such as Shanghai, Guangzhou and Beijing.

Invest Hong Kong

Director-General of Investment Promotion at Invest Hong Kong, Mr Simon Galpin, said, “In the face of the global economic downturn, 2009 was a challenging year for Invest Hong Kong. The positive investment promotion results last year demonstrate that Hong Kong remains the base in Asia from which overseas, Mainland and Taiwanese companies prefer to expand their business.

“In these times of economic uncertainty, the enduring advantages of Hong Kong such as its rule of law, low and simple taxes, level playing field, free economy, world-class communications and transportation infrastructure, and available talent pool, have become increasingly important. They continue to enable the city to act as a stable and secure platform for companies looking to do business in the region and beyond,” Mr Galpin said.

Highlights of 2009
In total, the 265 companies that Invest Hong Kong helped last year planned to create more than 6,000 new jobs within the first two years of their operation or expansion in Hong Kong.

Geographically, Asia Pacific, Europe and North America accounted for 43 percent, 35 percent and 18 percent, respectively, of the total number of Invest Hong Kong’s completed investment projects in 2009.  The Mainland continued to be the single largest market by source of completed projects, followed by the US and UK.

By priority sector, the top three performers were Business and Professional Services including education services and design, Technology including renewable energy, and Special Projects, which includes environmental technology and the wine sector.

Commenting on the role of Hong Kong as a base from which companies can expand their businesses, Mr Galpin said, “Hong Kong’s strategic location and international exposure make it an ideal two-way service platform for Mainland companies to go global and for foreign companies to access opportunities in the Mainland.”

Looking forward
Invest Hong Kong has realigned its priority sectors and strengthened its research and aftercare capabilities in order to encompass the six new growth industries where Hong Kong has a clear competitive advantage: namely, testing and certification, medical services, innovation and technology, culture and creative industries, environmental industry and education services.

In 2010, the Department will increase its activities to attract companies from emerging markets such as India, Latin America, the Middle East and Russia. In addition, Invest Hong Kong will continue to strengthen its marketing promotion efforts on the Mainland to assist corporations to expand internationally by using Hong Kong as their hub. It will also continue to organise joint promotion seminars with Mainland partners in key overseas cities to promote the combined advantages of Hong Kong and the Mainland, in particular the Pearl River Delta region.

Mr Galpin added that the Department’s pipeline of live projects is stronger than ever. He said, “Investment promotion is crucial to our economic development and our long-term objectives of maintaining the status of Hong Kong as a leading location for international direct investment. Our target for this year is to achieve 270 completed investment projects.”

For mining and natural resources companies planning to raise funds, this seminar will provide them with an opportunity to better informed of Hong Kong’s securities market – one of the most active and liquid markets in the world. In 2009, US$31 billion was raised through new listings in Hong Kong, which was the top global IPO fund raising centre for the year.

Special guest speakers at the seminar include: Prof K.C. Chan, Secretary for Financial Services and the Treasury of the Government of Hong Kong Special Administrative Region, and Ronald Arculli, Chairman of HKEx.

Senior executives of HKEx and intermediary firm representatives and advisors will also be present to offer complimentary advice and insights on “Why and how mining companies can list in Hong Kong” including such practical subjects as “Preparing for IPO in Hong Kong:  the process and common issues” and “How mining companies can attract investors in Asia through listing in Hong Kong”. On experience-sharing, the President & CEO of SouthGobi Energy Resources, Alexander Molyneux, will discuss with the audience the “Benefits of dual listing on HKEx”.

Pre-registration is required. For event details, please contact Andrew Yui, HKTDC Toronto Office at email: andrew.yui@hktdc.org or Tel: (416) 366-3594

The Rusal offering was priced at HK$10.80 per share, which was the mid-point of the original price range, but the bottom of the slightly tighter guidance range of HK$10.80 to HK$12 that the bookrunners went out with towards the end of the bookbuilding. It was reported that more than 350 institutional investors had came into the deal, which was more than two times covered.

Meanwhile, Mongolia-based coal miner SouthGobi Energy Resources has also raised HK$2.89 billion (US$373 million) from a separate share sale that was very well received. While SouthGobi has all its mining operations in Mongolia, the company is Canadian and it is already listed in Toronto. The Hong Kong stock exchange has worked hard in recent years to broaden the line-up of new listings beyond companies from Greater China.