Together with New York and London, Hong Kong is also known as the "Port of Nuremberg". It is the world's third largest international financial center, an important trade, shipping, and innovation and technology center. It is also the world's freest economy and most competitive city.
In the 13 years from 2009 to 2021, Hong Kong has become the world's largest IPO fundraising market for seven times.
In particular, the reform of the "same share with different rights" listing system in 2018 has injected new vitality into the development of Hong Kong's capital market. In 2019, it became the "financing king" in the global securities market.
By the end of June 2022, there were 2,581 listed companies in Hong Kong, with a total market value of US$7.75 trillion.
01
According to the current market environment
Listing in Hong Kong may be a better solution
The listing conditions in mainland China are strict, the review time is longer, and the listing rules on the Science and Technology Innovation Board have become stricter.
However, the cost of listing in the United States is high, and under the shadow of the "Foreign Company Accountability Act", in 2022 alone, many Chinese companies have returned to Hong Kong to list, such as Zhihu, Shell, Weilai, etc.
A few days ago, Alibaba announced a major move to apply for a dual primary listing in Hong Kong and New York.
After the relevant procedures are completed, Alibaba will become a Hong Kong stock in the legal sense, will have independent pricing power, and will meet the conditions of "Hong Kong Stock Connect", and its main listing status will not be affected by risks such as forced delisting from overseas listings.
Many Chinese concept stocks make similar choices, which may further boost the competitiveness of the Hong Kong stock market and attract more international funds to flow into Hong Kong, forming a virtuous circle.
02
Hong Kong to China Financial Market
the special strategic value of
Hong Kong is a bridge connecting China with the world, and has irreplaceable special strategic value.
On the one hand, the structure of Hong Kong investors is dominated by foreign institutional investors.
On the other hand, the interconnection mechanism between Hong Kong and the mainland allows the Hong Kong market to be deeply connected with the mainland capital market.
As the most prosperous free port in the world, international funds can freely flow to and from Hong Kong, which is a natural bridgehead for funds to enter the Chinese mainland.
Mainland China is currently the economy that attracts the most foreign direct investment (FDI). Most of the FDI does not directly enter the Mainland, but passes through Hong Kong. In 2020, more than 70% of Mainland China's FDI will come from Hong Kong SAR.
Hong Kong's unique legal and financial system can be seamlessly connected with the New York and London markets, and is naturally favored by international capital. If mainland companies want to obtain overseas financing, Hong Kong is the most convenient channel.
In addition to the traditional initial public offering (IPO) (which includes two forms of VIE red chips and H shares), a reverse takeover method can also be used to obtain listing funds.
Diversified financing channels, including: additional issuance of new shares, convertible bonds, warrants, high-yield bonds, leveraged financing, etc. can all be conducted through the Hong Kong capital market.
Although the Hong Kong Stock Exchange is located in Hong Kong, most of the companies that have raised funds on the Hong Kong Stock Exchange in recent years are from the mainland.
In 2020 and 2021, Chinese companies will account for 99% and 98% of the funds raised on the Hong Kong Stock Exchange. At present, Chinese companies account for more than 70% of the constituent stocks of Hong Kong's Hang Seng Index. In this sense, the Hong Kong stock market has become a barometer of China's economy.
This year marks the 25th anniversary of Hong Kong's return to the motherland. In the 25 years since the handover, Hong Kong and the mainland have become increasingly connected.
Under the new situation, mainland companies listing in Hong Kong can not only make full use of global funds and resources, but also avoid geopolitical risks due to their backing to the mainland.
03
When the company goes public
Do a good job in tax compliance and tax planning
Presumably most entrepreneurs tend to do both, so identity planning is crucial.
On the one hand, at the level of tax information exchange, identity planning can give entrepreneurs an additional security protection.
On the other hand, companies with foreign business status can still enjoy preferential policies, and at the same time, their tax-related status may be changed accordingly, and the tax amount will be reduced to a certain extent.
Entrepreneurs pass
Holding Hong Kong identity can achieve:
Reasonable tax planning, assisting companies to go public, establishing overseas family trusts, and cross-regional and country-specific investments, through diversification of investments, reduce asset correlation as much as possible, effectively avoid single market risks, and obtain broader investment opportunities.
At present, the popular ways to obtain Hong Kong status include: Talent Program, Professional Talent Program, and Advanced Study Program. Want to know which method is right for you? Welcome to consult Nebula International to obtain your identity planning & asset allocation plan.
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