Following is a question by Dr the Hon Tan Yueheng and a reply by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, in the Legislative Council today (October 22):

Question:

     It has been reported that the funds raised through initial public offerings in Hong Kong in the first nine months of this year has increased by over 200 per cent as compared with the same period last year. Regarding measures to promote the development of the financial market, will the Government inform this Council:
 
(1) whether it will, in the light of enterprises from different jurisdictions, establish flexible information disclosure standards and transitional arrangements for listing to attract more international enterprises to list in Hong Kong, thereby elevating the international status of Hong Kong's capital market and drawing greater capital inflow;
 
(2) whether it will continue to promote fintech development and product diversification of the exchange traded fund (ETF) market, such as exploring innovative market infrastructure with the use of blockchain technology and offering more globalised ETF products, with a view to developing Hong Kong into a leading international ETF trading hub; and
 
(3) as it has been reported that since the implementation of the GEM (formerly known as "Growth Enterprise Market") reform measures last year, a total of four enterprises have listed on GEM, and a new listing on GEM this year has even recorded an oversubscription of over 9 000 times, whether the Government knows if the Hong Kong Exchanges and Clearing Limited has assessed the effectiveness of the GEM reforms, and how it will continue to refine the overall listing regime for developing a healthier and sustainable capital market?

Reply:
 
President,
 
     With Hong Kong as an international financial centre, the Government is driving the Securities and Futures Commission (SFC) and the Hong Kong Exchanges and Clearing Limited (HKEX) to better leverage our unique advantages of enjoying strong support of the motherland and being closely connected to the world under "one country, two systems". This includes taking forward reforms across different areas of the securities market and implementing various enhancements to the listing regime to promote high-quality market development.
 
     With the implementation of a series of listing reforms, Hong Kong's primary market saw 69 newly listed companies in the first three quarters of 2025 with over HK$180 billion raised through initial public offerings (IPO), representing an increase of over two times compared to the same period last year and ranking first globally. The number of listing applications is also surging. The HKEX was processing close to 300 listing applications as of end-September. In addition, four companies were listed on GEM since its reform in 2024, raising HK$280 million. 11 applications from small and medium enterprises for listing on GEM have been received so far this year, indicating that the earlier measures are beginning to yield results. Riding on the positive momentum in 2025, the HKEX and the SFC are taking forward further institutional enhancements to strengthen the vibrancy and competitiveness of Hong Kong's market.
 
     In consultation with the SFC and the HKEX, my reply to the three parts of the question is as follows:
 
(1) and (3) As a "super connector" between the world and our country, Hong Kong serves the function to facilitate efficient two-way flows of international and Mainland capital. International institutional investors have wide participation in Hong Kong's IPO market. More overseas issuers, including those from Thailand, Indonesia, Kazakhstan, Singapore, etc, have chosen to list in Hong Kong this year. International participation has also attracted Mainland enterprises to accelerate their global expansion through Hong Kong's market. Since the beginning of the year until end-September, over half of the companies listing in Hong Kong have international businesses, with about 50 per cent of their revenue generated from overseas markets.
 
     The Government will continue to drive the SFC and the HKEX to refine the listing mechanism for attracting enterprises with growth potential from around the world to list and raise funds in Hong Kong. To this end, the HKEX enhanced the listing requirements for overseas issuers by introducing a set of core shareholder protection standards applicable to all issuers and publishing guidance to facilitate compliance. For enterprises listed overseas, the HKEX established facilitative pathways for them to seek dual-primary or secondary listing in Hong Kong. This includes relaxing the market capitalisation requirement for Greater China issuers without weighted voting rights (WVR) structures to secondary list in Hong Kong, and offering greater flexibility for eligible issuers with WVR or variable interest entity structures which meet the requirements for secondary listing to obtain primary listing status in Hong Kong. The HKEX has also included a number of exchanges from the Middle East and the Association of Southeast Asian Nations (ASEAN) region onto its list of recognised stock exchanges successively since 2023, facilitating companies listed on relevant markets to seek secondary listing in Hong Kong. In addition, the HKEX has formulated flexible information disclosure standards and transitional arrangements to provide facilitation to overseas issuers, such as where appropriate, permitting overseas issuers to prepare annual financial statements using standards as recognised by the HKEX other than Hong Kong or international financial reporting standards, and granting grace periods for full compliance with the Listing Rules for issuers transitioning from secondary to dual-primary listings.
 
     To strengthen Hong Kong's competitiveness as a listing venue, the SFC and the HKEX have been continuously assessing the effectiveness of the listing reforms and actively following up on various initiatives outlined in the Chief Executive's 2025 Policy Address. They include further refining different aspects of the listing regime while balancing relevant risks and investor protection, and reviewing the listing requirements for companies with WVR structures. The review will also further explore ways to better serve the fundraising needs of enterprises of different types and sizes on the basis of the GEM reform, as well as attracting more investors and capital to enter Hong Kong's market. The HKEX will announce relevant enhancement measures with public consultation to be conducted as appropriate once they are ready.
 
(2) The global exchange-traded fund (ETF) market has grown rapidly in recent years, facilitating investors to diversify their investment portfolios across different asset classes and strategies effectively. The Government is committed to supporting the development of local ETF market. We have waived the stamp duty on secondary market trading of ETFs and stock transactions by market makers in the course of creating and redeeming ETF units since 2015 and 2020 respectively, thereby lowering relevant trading and listing costs. In 2022, ETFs were included under Stock Connect, allowing Hong Kong and overseas investors to trade eligible ETFs listed on the Shanghai and Shenzhen exchanges, and enabling Mainland investors to invest in eligible ETFs listed in Hong Kong.
 
     Meanwhile, we proactively expand the local ETF ecosystem. Since 2023, we saw various product innovations, including the listing of Asia's first ETF tracking the Saudi Arabia market in Hong Kong, and the listing of two ETFs tracking Hong Kong stocks on Saudi Exchange in the form of feeder funds, establishing a bridge for two-way capital flows between the two places. Last year, the HKEX launched Asia's first batch of spot virtual asset ETFs and Hong Kong's first batch of covered call ETFs, catering to investors' demand for non-traditional assets as well as tools to manage potential market volatility and hedge downside risks. This year, we also welcomed the cross-border listing of the world's fifth-largest ETF by market capitalisation and the listing of the first Islamic bond ETF in Hong Kong.
 
     With strong policy support, Hong Kong has developed into one of Asia's largest and most active ETF markets, attracting participation of a wide range of issuers, market makers and investors. In the first three quarters of 2025, the average daily turnover of ETFs in Hong Kong reached HK$34.2 billion, up 113 per cent from the full-year average in 2024 and 190 per cent from the full-year average in 2023. As of end-September, assets under management in Hong Kong's ETF market reached HK$625.4 billion.
 
     We look forward to working closely with different stakeholders, striving to introduce more innovative products including promoting the issuance and trading of tokenised ETFs and assisting issuers to issue gold-related ETFs, thereby further reinforcing Hong Kong's position as an all-rounded leading ETF trading hub. We also support the HKEX's efforts to further step up its promotional work in ASEAN and the Middle East, and to actively explore collaboration opportunities with countries in the region including ETF listings to further enrich the local ETF ecosystem.
 
     Thank you, President.

Ends/Wednesday, October 22, 2025
Issued at HKT 13:04

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