Abstract:
2018 marks the 40th anniversary of Deng Xiaoping’s economic reform, which paved the way for the emergence of the Chinese stock exchanges. The purpose of this thesis is to investigate the progressive liberalisation of China’s capital markets over the last forty years, how Hong Kong has contributed to China’s economic development, and why many foreign enterprises decide to list in Hong Kong.
The first chapter compares the Chinese capital markets with the Hong Kong securities market in terms of market development and securities regulation, contextualizing their historical background and political economy.
The second chapter focuses on the main motivations that push overseas companies to list on the Hong Kong Stock Exchange and examines the cooperation and the gradual integration between Hong Kong and Mainland China’s stock markets by means of new schemes adopted by Chinese government in order to liberalize cross-border capital flows. These programmes, i.e. H-share system, QFII and RQFII schemes, Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect, which are a breakthrough in the opening-up of China’s capital markets to international investors, establish a trading link between the two separate stock exchanges and show that China is accelerating the liberalisation of its capital market.
In the last section of the paper, Prada Group will be taken as an example in order to better understand what the benefits of listing international companies in Hong Kong are and if it is advantageous for overseas firms to quote in this stock exchange.
