HSBC chairman floats ‘IPO connect’ for Hong Kong, Shenzhen ahead of China’s ‘two sessions’

Beijing should create a “connect” scheme for initial public offerings (IPOs) in the Greater Bay Area to allow mainland Chinese and Hong Kong investors to buy into new listings across the border, HSBC Asia-Pacific chairman Peter Wong Tung-shun said on the eve of China’s annual “two sessions” meetings.“If investors in both Shenzhen and Hong Kong are further allowed to participate simultaneously in IPOs in both markets – achieving a more comprehensive IPO connect mechanism for the Greater Bay Area – it would help further deepen financial collaboration between Shenzhen and Hong Kong,” said Wong, who is a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body.Aligned with the Stock Connect cross-border trading mechanism, the link would improve “the inclusiveness and adaptability of the domestic capital market” and further promote yuan internationalisation, he added in a statement.The annual session of the CPPCC will commence on Wednesday, followed by the meeting of the National People’s Congress (NPC), the country’s top legislature, on Thursday. The two major political gatherings are expected to deliberate and approve the full text of the 15th five-year plan, which will set the country’s development road map through 2030.Wong’s proposal would build on Beijing’s landmark decision in June to allow mainland companies listed in Hong Kong to seek secondary listings on the Shenzhen Stock Exchange, giving Greater Bay Area businesses new channels to raise funds for onshore expansion.Stock Connect, introduced in November 2014, links the Hong Kong and Shanghai secondary markets, allowing investors on both sides to trade shares listed on the counterpart exchanges. The programme expanded to include Shenzhen in December 2016, and later broadened to cover bonds, exchange-traded funds, wealth-management products and interest-rate swaps.