Hong Kong Passes NYC in Attracting IPOs

A photographer takes a picture of the logo of the Industrial and Commercial Bank of China (ICBC) in Hong Kong in this Oct. 15, 2006 file photo. Hong Kong's market surged past the New York Stock Exchange this year and became the world's second most popular place, after London, for companies to float new stock listings. One of them was the world's biggest ever: the US$21.2 billion offering in October by Industrial & Commercial Bank of China, the mainland's largest lender. (AP Photo/Vincent Yu, File) (Vincent Yu - AP)

Ma said Hong Kong was already benefiting from a new clustering of businesses drawn to the city because of its success in finance. The world's top 70 banks are operating there, he said. In 1995, the city only had 200 chartered financial analysts, but now it has 3,000 _ ranking it No. 4 in the world behind the U.S., Canada and Britain, he said.

But some say the back patting is premature and that Hong Kong is nothing more than a regional finance center.

Jake van der Kamp, a finance columnist for Hong Kong's South China Morning Post and a former investment banker, said a true global finance capital should be like a long dining table with several legs. He noted that Hong Kong doesn't offer much in the way of bond, foreign exchange and commodities trading.

"All I see here is a one-legged stool," he said, adding that Hong Kong was just a listing center for Chinese equities.

Hong Kong is heavily dependent on listings by mainland Chinese companies. The firms make up nearly 50 percent of the total market capitalization of $1.59 trillion, according to Hong Kong Exchanges & Clearing. The companies make up 73 percent of total equity funds raised, it said.

Many believe Hong Kong will lose some of this investment as Chinese firms decide to stay closer to home and float more shares on the Shanghai Stock Exchange, which is enjoying a big renewal of investor confidence. The market's blue-chip index hit a record high Friday.

When the giant Industrial & Commercial Bank of China launched its IPO in October, it decided to do a historic dual listing in Hong Kong and Shanghai.

Shanghai is still a minnow compared to Hong Kong, which has average daily turnover of $4.21 billion _ 12 times the volume of Shanghai. But this will likely change.

"China's domestic markets are growing up, developing their own importance, and it will be a challenge going forward to other markets in the world," said Hans Schuettler, managing director and chief executive officer in Asia for Morgan Stanley & Co.

But Schuettler said that a regional market would grow up in Asia. "This is what we've seen in Europe. This is what I definitely expect to happen in a more pronounced version here," he said.

One thing Hong Kong needs to be more aggressive about doing is attracting IPOs by companies that have operations in China but are owned by firms in the U.S., Canada, Germany and other places, said Ronald Arculli, chairman of Hong Kong Exchanges & Clearing.

Arculli was also confident that economic growth in Asia _ particularly in India and China _ will send plenty of business Hong Kong's way. He agreed that, like Europe, the region will have room for more than one big stock market.

"What's the problem with Asia having Hong Kong, Shanghai, Tokyo and India?" he said. "We are two-thirds of the world's population, with two of the biggest economic powerhouses in the next 20 to 30 years to come. There's plenty for everyone."