vst_products
You Make It, We'll Sell It: Hong Kong-listed VST is out to conquer the PRC's retail IT/tech product market. Will PRC-based tech firms follow the lead and list in Hong Kong?
Photo: VST

SHANGHAI, SHENZHEN AND SILICON VALLEY take note...

Hong Kong stock market promoters are out in force to convince leading firms from Beijing’s hi-tech Zhongguancun hub to list on their bourse.

The campaign is significant because Shanghai (as well as Shenzhen) is the generally-accepted capital market of choice for start-up technology firms in China, and if they jump ship and go directly to Hong Kong for IPOs, then all bets are off.

In addition, the China Securities Journal said in a Chinese-language report that Beijing’s Zhongguancun is not the world's first tech mega-park to liken itself to so-and-so’s answer to Silicon Valley.

But with China leapfrogging several countries over the past half-decade to become the No.2 global economy today, investors the world over are starting to take these claims a bit more seriously.

First, a bit about “China’s Silicon Valley’ for the uninitiated.

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Lenovo is the highest profile tech firm from Beijing's "Silicon Valley" to seek funds on the Hong Kong bourse. Photo: Company

Zhongguancun (中关村), a state-sponsored high-tech development zone in the northwest corner of Beijing, is surrounded by some of the country’s leading universities such as Peking University, Renmin University and Qinghua University.

Therefore, there is no lack of local tech talent to fill the payrolls of the flurry of fledgling firms hoping to make it big on the dot.com, software, hardware or tech-support stage.

The report said that this week in Beijing, the Zhongguancun Management Committee along with representatives from the Hong Kong Stock Exchange, signed a memorandum of cooperation, announcing that the two sides will establish “close relations of cooperation” to promote a national showcase of independent innovation among listed Zhongguancun-based enterprises, and that with the help of the international capital markets, business development would be accelerated and strengthened.

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Founder recent price: 0.27 hkd

The report added that according to the tieup, both parties will work to boost strategic information sharing, policy coordination and capital market data interchange in order to strengthen information communication systems and boost acumen of the latest market requirements for jointly-produced and developed products and services.

Going above and beyond the call of duty of the average bourse, the HKSE representatives further went on to say that they would be amenable to holding regular seminars and technical exchange visits to boost the market acumen and high-tech trend receptivity of both parties.

But for the skeptics out there, the Hong Kong bourse may be a bit behind the eight ball.

It is well documented that prior to the HKSE’s latest foray into Beijing’s “Silicon Valley,” other bourses including the Shenzhen and Shanghai A-share markets, as well as the NYSE and Nasdaq, had already pounded the pavement in Zhongguancun in search of the next big high-tech IPO phenomenon.

Therefore, the Hong Kong bourse boosters may be a bit late into the game, but the moribund capital markets worldwide may also mean that their timing and enthusiasm could not be more opportune – at least from the IPO listco hopefuls’ vantage point.

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Kingsoft recent price: 3.16 hkd

And who exactly are we talking about?

A list of the Beijing-based high-tech target firms in the crosshairs of the HKSE sales team are not yet a matter of public record.

However, a bit of connect-the-dots could point us to who exactly is most likely to take the bait in Zhongguancun and throw their lot into the Hong Kong stock exchange, with sector peers of the following likely to be of interest.

To date, the following Hong Kong-listed firms have their headquarters in Zhongguancun:

Global No.4 computer maker Lenovo Group Ltd (HK: 992), PC maker Founder Holdings Ltd (HK: 418) and software giant Kingsoft Corp Ltd (HK: 3888).

With successes like these, tech peers in Beijing’s “Silicon Valley” are unlikely to overlook Hong Kong as a viable start-up capital raising platform.

See also: RIGHT TIME FOR REITS? Hong Kong Beckons...

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