March 17, 2022
HONG KONG – The COVID-19 pandemic will not jeopardize Hong Kong’s well-established capital market, as well as its professional body of accountants, lawyers and bankers, which lays the building blocks for foreign direct investment in the long term, professional accounting body CPA Australia said.
Eden Wong Yi-dung, president of CPA Australia Greater China Division, told China Daily that the fifth wave of Omicron outbreak is a short-term threat to the Hong Kong economy, but it will not affect the city’s financial infrastructure, with which its business activities are still showing growth amid the coronavirus pandemic.
According to statistics published in February by the Hong Kong Monetary Authority, total deposits with authorized financial institutions increased by 2.6 percent year-on-year in January. Hong Kong dollar deposits and foreign currency deposits grew by 1.3 percent and 3.8 percent year-on-year respectively. Renminbi deposits rose by 18.2 percent, which were driven by inflows from corporations.
Financial markets worldwide have been volatile in recent days because of the Russia-Ukraine conflict, and heightened geopolitical risks could affect market sentiment. For Hong Kong, however, its first SPAC listing will be an important milestone and should have a positive effect on the development of its capital market.
Eden Wong Yi-dung, president of CPA Australia Greater China Division
Wong said the newly introduced listing regime for the special purpose acquisition company, by the Hong Kong Stock Exchange in January is expected to increase the “attractiveness and competitiveness of Hong Kong’s capital market internationally”.
A total of 10 blank check companies had submitted prospectuses as of Wednesday. Aquila Acquisition Corp backed by China Merchants Bank, the first of its kind in Hong Kong, will list on Friday, aiming to raise HK$1 billion ($127 million).
“Financial markets worldwide have been volatile in recent days because of the Russia-Ukraine conflict, and heightened geopolitical risks could affect market sentiment. For Hong Kong, however, its first SPAC listing will be an important milestone and should have a positive effect on the development of its capital market,” Wong said.
Compared to traditional IPOs, SPACs are a new way of doing mergers and acquisitions. Acquisition targets for the 10 shell companies are expected to focus mainly on green finance, biotech and healthcare. Wong said companies in those sectors are growing rapidly, and their valuations have been less impacted by the pandemic.
Omicron could potentially affect the acquisition schedule of SPACs, but should not affect acquisition targets, he said.