A Paradigm Shift Towards a Green and Sustainable Finance Center

Hong Kong in Transition: A Paradigm Shift Towards a Green and Sustainable Finance Center 23 Along with the rise of Mainland Chinese offices in Hong Kong, there is a corresponding trend in market capitalization. In 2020, market capitalization of the Hong Kong securities market peaked, per the data from Hong Kong Exchanges and Clearing Limited (HKEX); and 80% of it came from market capitalization of Mainland Chinese enterprises (Figure 14). The proportion of their market capitalization was below 60% before 2014. However, in the past five years, it has stood at least three-quarters of the total. This Mainland Chinese-inspired growth has had a positive effect on the overall growth of Hong Kong’s securities market. Figure 14: Market Capitalization and the Proportion of Mainland Chinese Enterprises (Source: Based on data from HKEX. Note: The percentages in the figure refer to the proportion of market capitalization in Hong Kong’s securities market represented by Mainland Chinese enterprises.) In 2008, United States investors accounted for the largest share of external investors’ trading in the spot market of HKEX (Figure 15). In 2009, European investors replaced the United States with the largest share. However, the share of Asian investors increased rapidly from 2013 and the continent became the biggest player in 2018. In particular, the proportion of Mainland Chinese investors grew rapidly, accounting for more than half of the proportion of Asian investors since 2014/15 and has become the largest single-origin external investor since 2018. As a major global financial center, Hong Kong is considered an attractive destination for companies seeking to raise capital. It is a preferred choice for companies to go public overseas. It may not surprise anyone if the number of Mainland Chinese companies takes a dominant presence in the total number of newly listed companies in Hong Kong in some years. Nonetheless, in recent years, companies from Mainland China have become virtually the only group that chooses to list in Hong Kong. In the period from 2019 to 2023, on average, 80% of newly listed companies in Hong Kong were from Mainland China; the number becomes 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Market capitalization of HK securities market Market capitalization of Mainland Chinese enterprises 57% 57% 60% 62% 63% 66% 68% 73% 80% 79% 77% 76% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 HK$ billion