Bao Haijie, Deputy Director Of Marketing Development Department Of Hkex And Head Of Global Listing Service, IPO: Biotech IPO Has Been Popular In The Market.

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The biotechnology ecosystem of HKEx has already begun to take shape. For this reason, Hang Seng Index launched the Hang Seng Hongkong listed Biotechnology Index at the end of last year, with a total of 43 stocks. The index has risen to nearly 13% so far this year, which has significantly outperformed the Hang Seng Index's 15% decline over the same period.

Although the haze is not yet completely dispersed, the Hong Kong Stock Exchange's biotech boom is coming.

In May 12th, no biotech enterprise with profit or income has opened up the pharmaceutical industry (09939) to start the IPO. It is reported that the international placement portion was fully subscribed on the first day of the prospectus, and the public offering was also highly sought after, with an over subscription of about 70 times.

"During the epidemic period, the entire Hong Kong stock market IPO has not stopped. The most serious outbreak of the disease in March second weeks still have 7 companies listed. In the first quarter of this year, a total of 39 companies completed the listing, raising funds amounting to 14 billion 100 million yuan. The Hongkong market has shown great resilience. Bao Haijie, deputy director of Marketing Development Department of HKEx and director of global listing service, said in an interview with the twenty-first Century economic report.

She said frankly that due to market fluctuations and restrictions on travel, some of the planned timetable for Hong Kong listed companies that had planned to come in the one or two quarter slowed down or delayed. "Some of the companies that have just completed the delivery or delivery of the list are undoubtedly going to be affected by the progress of the listing, but from the schedule of the listing application, they are still very healthy. Cautiously optimistic. TMT (Technology, Media, Telecom, technology, media and communications), biotechnology, big consumption and so on are the areas where investors are very concerned.

"The Asian market has been the largest supplier of IPO in the world, and these fundamentals have not changed, and enterprises hope to have a healthier balance sheet under the current crisis. Therefore, we believe that the situation in the second half of this year is more optimistic. Judging from the listing of IPO over the years, the three quarter will usually be a good time window, and many enterprises will catch up before the fourth quarter. She said.

The Hong Kong Stock Exchange's biotech listing boom is coming. IC photo

Biotechnology stands out

Within a short span of two years, Hongkong has become the second largest biotechnology financing center in the world. Since the new regulation came into effect in April 2018, the Hong Kong Stock Exchange has welcomed 28 medical, health and biotechnology companies to list in Hongkong, with a financing amount of HK $82 billion 500 million. Since the launch of the new regulation of Chapter 16 of the HKEx (referring to the terms that allow non biotech companies to meet certain conditions for listing), up to the end of April this year, a total of 6.7% biotech companies with no income have been listed, accumulating a total fund of HK $39 billion 700 million, accounting for 6.7% of the total financing amount of Hongkong's new share market in the same period.

Bao Haijie disclosed that so far this year, 12 health care companies have submitted A1 listing applications, of which 4 are biotech companies with no income. A sudden outbreak did not impede Biotech Corp's listing in Hong Kong, but rather highlighted their attractiveness. "During the epidemic period, both the recognition rate of the market and the level of activity are increasing."

Two new biotech companies, NOK Cheng Jianhua, and Kang Fang BIE respectively landed in the HKEx in March and April this year, gaining 298 times and 692 times over subscriptions.

Compared with traditional industries, bio pharmaceutical enterprises are characterized by high input, high output, high risk and high technology intensive. Equity financing is an important way of financing for the growth of biomedicine enterprises. In recent years, the main securities markets in the world have gradually established rules of securities market applicable to the listing of biotechnology enterprises, and have thrown olive branches to many Biopharmaceutical Enterprises that have been excluded from traditional markets.

At the same time, in the biotech sector, the HKEx already has a fully mature IPO and refinancing system. "Our listing approval system is clear and transparent, and the listing process is highly efficient. It usually takes 6-9 months to complete. Hongkong has a flexible refinancing system and diversified refinancing methods, and the listed companies can finish the "lightning placement" overnight. She smiled.

At present, there are 146 medical and health companies listed on the Hongkong market, with a total market value of HK $1 trillion and 850 billion, an increase of 72% in April 2018 compared with that before the new listing rules came into effect. The health care sector and the 18A sector (no biotech stocks that still have revenues) are also increasingly active. The turnover of the medical health sector in 2019 is 3.5 times that of 2017, and the turnover of the 18A sector in 2019 is 4 times that of 2017. The overall market value of the healthcare sector in 2019 was 1.8 times that of 2017, equivalent to the doubling of the entire market.

"In addition to the issuance of primary markets, the liquidity and investor structure of the two tier market are becoming more and more mature. The launch of the new rules of the HKEx listing is just around the corner. The technological breakthroughs in many innovative medicines in the Asian market require long-term stable and cost controllable financial support." She pointed out.

The biotechnology ecosystem of HKEx has already begun to take shape. For this reason, Hang Seng Index launched the Hang Seng Hongkong listed Biotechnology Index at the end of last year, with a total of 43 stocks. The index has risen to nearly 13% so far this year, which has significantly outperformed the Hang Seng Index's 15% decline over the same period.

Bao Haijie said frankly, compared to the global biotechnology exchange leading Nasdaq, the Hong Kong stock exchange still has a certain distance. "From the perspective of product system, it can further enrich and expand. In the future, we can introduce some index tracking and derivatives, including exchange traded fund (ETF), to provide more choices for investors."

As of February last year, about 745 large health companies were landing on the Nasdaq market, of which about 171 were biopharmaceutical companies, with a total market value of US $490 billion 700 million. The United States has formed the world's largest biotech ETF market, with a total of 18 ETF, with a total asset management scale of about $19 billion.

In addition, she said that at present, the 16 18A listed biotechnology companies in HKEx have not yet been included in the "Stock Exchange". "These companies' customers and markets are all in the mainland, but mainland investors can not invest in these two markets through Hong Kong stocks for the time being. They hope that these companies will have good performance in the future, and they can discuss with the relevant regulatory authorities."

China's stock return boom

Last November 26th, after five years, Alibaba finally returned to the HKEx's embrace. The performance of Ali after its second listing in Hong Kong has made more Chinese stock companies "ready to move".

It is reported that the mainland electricity supplier Jingdong plans to launch a second listing in Hong Kong in May 25th, raising about $3 billion. NetEase and Ctrip are also preparing for the second listing.

Whether or not China's stock market returns to the second market is mainly based on the situation of the company itself and the changes of the external environment. We have been holding discussions with these companies. The return of the listing of Ali last year has set a good precedent for other companies. " Bao Haijie said.

According to the statistics of China gold, the daily trading volume of the first five trading days of Alibaba listed in Hongkong is HK $9 billion, and after that, the trading volume is about 3 billion 200 million Hong Kong dollars, corresponding to the average turnover rate of 2.6%, and the transaction is more active in second.

She pointed out that in the past two years, the Hong Kong Stock Exchange has become one of the preferred destinations for new economic companies to list, and the amount of financing of new economic companies accounts for over 50% of the total stock market in Hongkong over the same period. The market value of new Hong Kong listed companies now accounts for 17% of the total market value of the Hongkong stock market.

Data show that as of June 21, 2019, a total of 367 stocks were listed outside Hong Kong stocks, totaling 1 trillion and 540 billion US dollars, which exceeded the total market value of many developed countries' stock markets. From the perspective of the listed market, the US stock market is the main overseas listing place of China's stock market. In the three major exchanges of the US stock market (NYSE, NASDAQ and AMEX market), there were 228 stocks in total, with a total market capitalization of 1 trillion and 510 billion US dollars.

Before that, a few Chinese stocks were returning to the A share market on the path of "privatization overseas - Mainland backdoor listing", but they had to go through a series of complex processes, such as privatization, dismantling the VIE structure, clarifying the relationship between overseas SPV (Special Purpose Vehicle) and equity relations between domestic entities. In contrast, the return to Hong Kong stock market is much simpler. Of course, A shares are also undergoing a series of reforms to attract new economic enterprises to list on A shares.

In her view, with the gradual return of more new leading enterprises in the new economy, the volume and scale of the new economic sector of the Hong Kong Stock Exchange will be expanded. "And some of the companies representing subsectors are scarce before Hong Kong stocks. If these companies come to Hong Kong, they will attract more similar companies to join the Hong Kong stock market in the future. As the breadth, depth and activity of the market increase, it will attract more investors to participate in Hong Kong stocks.