The decision to formally approve Guernsey as an acceptable overseas jurisdiction was taken by the Hong Kong Stock Exchange’s Listing Committee on 24 March but not officially confirmed until this morning, when it was announced on the exchange’s website.
Guernsey Finance chief executive Peter Niven said the news was “a very positive development” for Guernsey’s financial services industry, and noted that business dependent on the listing was “already in the pipeline”.
“Our service providers are seeing continued growth in terms of the numbers of clients from the Far East, and there has been particular interest in being able to list Guernsey incorporated companies on the Hong Kong Stock Exchange,” Niven added.
He noted that the granting of listing rights was particularly important for Guernsey “because some of our competitor jurisdictions have this agreement in place already”. Niven did not name the jurisdictions.
Second-largest Asian exchange
The HKEx is often described as the second-largest exchange in Asia, behind the Tokyo Stock Exchange, as measured by the market capitalisation of its member companies. Many western companies seek a Hong Kong listing in an effort to make their shares more easily available to Asian investors. The Italian luxury goods firm Prada, for example, a popular brand among Asia’s newly-wealthy consumers, is planning to shun Europe’s exchanges with an initial public offering on the HKEx next month.
However, some experts have questioned whether companies benefit from having secondary listings, noting that relatively few investors have leapt at the chance to buy Prudential shares in Hong Kong since they were listed there last year. Similarly, many companies that listed in New York some years ago have subsequently withdrawn those listings, noting that they saved money spent on compliance costs in doing so.
For its part, like Prada and those other Western companies seeking a HKEx listing, Guernsey has also been setting out its stall in Asia, beginning in 2007 with the opening of a representative office in Shanghai. Last year Guernsey chief minister Lyndon Trott signed a memorandum of understanding with the Shanghai Financial Services Office, and a Tax Information Exchange Agreement with the Chinese central government tax authorities.