SEOUL, Sept. 11 (Korea Bizwire) – Only three South Korean companies are listed on the Hong Kong stock market, arguably the world’s biggest market for initial public offerings, sending worrying signals to South Korean economists.
According to sources provided by HKEX and KOTRA, over 339 and 252 billion dollars were exchanged in 2015 and 2016 at the Hong Kong stock exchange, becoming the world’s biggest market for initial public offerings (IPO).
With the latest economic forecasts predicting the total number of IPOs to surpass last year’s performance, with over 130 companies expected to generate 34 trillion won via IPOs in Hong Kong this year according to consulting firm PwC, the lack of South Korean companies listed on the Hong Kong stock market is being pointed out by economic experts.
Since 2002, when the South Korean toy and character maker Dream International was first listed in Hong Kong, only Cowell E holdings, which produces smart phone camera modules for Apple, Samsung and LG, and Future Data group, a holding company subsidized by Global Telecom Company, made it to Asia’s third largest stock exchange, for a grand total of three.
Among 1,955 companies listed, South Korean companies account for a mere 0.15 percent.
On the other hand, 989 Chinese firms are listed on the Hong Kong exchange, accounting for more than half.
Other Asian countries seem to be doing better, with Taiwan having listed 26 companies, followed by both Malaysia and Singapore, which have 15 and 14 companies listed, respectively.
Compared to the U.S., and Japan, which have listed 14 and 6 companies, respectively, South Korea still trails behind.
According to KOTRA, Mando China Holdings and social network service game company MeToon attempted to be listed in the past, but to no avail.
Experts say the lack of South Korean companies results from the strict standards imposed by Hong Kong’s stock exchange market, which can be evaded by setting up special purpose corporations in tax havens such as Cayman Islands or Bermuda.
In 2014, China’s largest e-commerce company, Alibaba, opted for the New York Stock Exchange after failing to reach an agreement on issues such as dual-class ownership.
Despite the difficulties, experts argue being listed in Hong Kong boosts confidence in international investors and can helps companies branch out into Southeast Asian markets.
Currently, E-Land International Fashion Shanghai and E-land Fashion Shanghai are in talks of a merger in an effort to launch an IPO on the Hong Kong exchange next year.