In this April 26, 2018 file photo, Laura Cha Shih May-lung, chairperson of Hong Kong Exchanges and Clearing, meets the media at Exchange Square in Central, Hong Kong. (PARKER ZHENG / CHINA DAILY)
The health science ecosystem has injected vibrancy and energy into Hong Kong’s financial market and the economy, Hong Kong Exchanges and Clearing Chairperson Laura Cha Shih May-lung said, underlining the stock market’s emergence as a leading player in Asia in biotech fundraising.
Biotech has become one of the fastest-growing sectors in Hong Kong, Cha told the bourse’s annual biotech summit which was hosted online on Thursday.
As of August, HKEX has 70 healthcare companies with a market cap of over US$1 billion. We are now Asia’s largest and the world’s second-largest biotech fundraising hub. HKEX is leading the world in healthcare listings.
Laura Cha Shih May-lung, Chairperson, Hong Kong Exchanges and Clearing
“As of August, HKEX has 70 healthcare companies with a market cap of over US$1 billion,” she said. “We are now Asia’s largest and the world’s second-largest biotech fundraising hub. HKEX is leading the world in healthcare listings.”
As of the end June, HK$209 billion had been raised by 67 new healthcare listings, HKEX data showed. Also, HK$87 billion had been raised by 33 pre-revenue biotech listings.
The Hang Seng Hong Kong-Listed Biotech Index, which now includes 54 constituents with 21 Chapter 18A stocks, reflects the overall performance of the biotech companies listed in the market. Since its launch in December 2019, the index has generated a return of 55 percent, or an annualized return of 40 percent, HKEX has reported.
Cha said HKEX is the “market of choice” for healthcare and biotech companies seeking global capital to fuel their growth aspirations in the post-COVID-19 world.
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She observed that the new listing regime introduced three years ago, including the Chapter 18A that allows pre-revenue biotech issuers that do not meet mainland financial requirements to list in the city, has helped to transform “the DNA of the market”.
Already 29 more new pre-revenue biotech issuers are lining up to list.
The bourse introduced three new chapters to its Listing Rules in 2018, to allow pre-revenue biotech companies, new economy companies with weighted voting rights, and qualified overseas listed new economy companies to raise capital via secondary listings in Hong Kong.
Cha said that before the listings regime reforms, real estate and financial institutions made up the largest sector of the market.
“The listings reform has transformed the DNA of Hong Kong’s market. HKEX has become a global leader in funding the ambitions of some of the most innovative new economy and biotech companies in the world,” Cha said.
She said the bourse has the highest rate of growth among other global exchanges in terms of the number of healthcare listings, initial public offering funds raised, and total market capitalization increases.
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“Our success is intertwined with the growth of Hong Kong’s biotech sector. The wave of listings we have attracted, in many ways, put Hong Kong on the global biotech stage,” Cha said.
“They have been benefiting from the city’s increasingly mature biotech funding ecosystem. Hong Kong is home to over 250 biotech businesses and the government has designated this industry as one of the key areas of innovation and technology.”
She said the business and financial community has also joined forces to build and improve the biotech ecosystem in Hong Kong.
“In supporting that work, including university programs, government funding and biotech finance professionals, have sprouted around it and developed unique Hong Kong characteristics. Now, almost every investment bank, or audit and consulting firm, has a healthcare focused team. Institutional investors among the sell-side analyst teams, have increasingly dedicated Asia-based healthcare experts with relevant science backgrounds,” Cha said.
HKEX biotech issuers are diverse, she said.
“Healthcare companies listed on our market include biotech, pharmaceuticals, medical devices and services, and life sciences.”
In terms of therapeutic focus, oncology has the widest coverage, followed by autoimmune and cardiovascular diseases, she explained. Many more subsectors are also represented.
“The increasing number of benchmarks that track the development of the biotech sector and the rise of the associated Exchange Traded Funds, as well as futures and options products on individual biotech stocks, further improved the diversity, breadth and depth of our market,” Cha said.
In March this year, the China AMC Hang Seng Hong Kong Biotech Index ETF became the first exchange traded fund to track the Hang Seng Hong Kong-Listed Biotech Index, the HKEX has said.
As for the potential of biotech listings that lies ahead for the market, Chan said, this is just the beginning.