By Selena Li and Kane Wu

HONG KONG (Reuters)

Beijing will support more high-quality enterprises from China to list and issue bonds in Hong Kong, stated China's Vice Premier He Lifeng on Tuesday. This support comes at a crucial time as Hong Kong's status as a financial center is under scrutiny.

Speaking at the Global Financial Leaders' Investment Summit hosted by the Hong Kong Monetary Authority (HKMA), He mentioned that China's recent stimulus measures are gradually benefiting Hong Kong's markets.

He added that Beijing would assist Chinese financial institutions in expanding their businesses in Hong Kong. "We will improve the issuance mechanism for treasury bonds, steadily increase issuance in Hong Kong, and help consolidate its position as a global financial hub," He noted, although specific details were not provided.

Hong Kong's status as a regional capital markets hub has diminished over the past few years, reflected in the declining value of initial public offerings (IPOs) and secondary listings. In 2024, there have been $9.1 billion worth of listings in Hong Kong, according to Dealogic data, compared to $5.88 billion in 2023. Despite this uptick, issuance volumes remain far below the 2020 peak of $51.6 billion.

The slowdown in deals has led Western and Chinese financial firms to cut hundreds of investment banking jobs in the past two years, and some international law firms have reduced or exited their businesses in the greater China region. The HKMA event features some of China's top policymakers and global bankers, marking the first appearance of He and all three main financial regulatory leaders since the event began in 2022.

TRUMP EFFECT

This event occurs amid China's ongoing economic slowdown, exacerbated by a property sector debt crisis and the lasting effects of pandemic lockdowns. Geopolitical uncertainties are heightened with Donald Trump's election as the next U.S. president, who has proposed tariffs of at least 60% on Chinese-made goods, which could strain diplomatic and business relations.

"Asia itself has very good core growth at 4.6%, even considering the tariff effect on China that will significantly impact growth; however, we think China can do a lot to remediate that," stated UBS chairman Colm Kelleher at the summit.

Citigroup CEO Jane Fraser and Goldman Sachs chairman David Solomon expressed that Trump's potential return to the White House could enhance corporate buyout activity due to expectations of reduced regulation. Fraser noted, "When we think about deregulation tapering there, we saw an almost immediate unlock happening with the election result. We have noticed significant growth in our pipelines, particularly in M&A and IPOs, which we would describe as the big unlock we've been waiting on."

Earlier this month, Beijing unveiled a 10 trillion yuan ($1.38 trillion) debt package to alleviate local government financing issues and stabilize the nation’s lagging growth.

($1 = 7.2364 Chinese yuan)