Taiwan’s government is blocking attempts by companies to list in Hong Kong, according to executives and bankers.
The move reflects Taipei’s fear that its financial markets could be sidelined and its economic dependence on China grow even more – concerns also illustrated by the government’s recent efforts to prevent private equity acquisitions of listed companies.
Bankers said that over the past year regulators had refused to approve the restructuring plans of a number of financial, technology and industrial companies preparing to list in Hong Kong.
Several Taiwanese companies have listed their China operations in Hong Kong in the past few years, but the assets are held by offshore vehicles and so outside Taipei’s jurisdiction. It is not a detour that is open to Taiwan-based enterprises.
Because the Hong Kong stock exchange does not accept listings from companies domiciled in Taiwan, those wanting to list in the territory must first establish an offshore holding company that buys the Taiwan entity. Bankers said the government had been blocking these transactions.
In July Chailease, Taiwan’s leading leasing company, listed in Singapore under the auspices of Financial One, its offshore holding firm, after the government opposed a plan to go public in Hong Kong.
“We presented the idea to the government and were told, ‘If you go for Hong Kong, your application will end up in that big pile there’,” said one person close to Chailease.
The Investment Commission, a cabinet-level body that reviews foreign direct investment, denied it was hindering firms’ attempts to list in Hong Kong but suggested Hong Kong IPOs were not in companies’ best interest.
“Listing in Hong Kong makes sense for China-based businesses. But for others, Nasdaq or Singapore make more sense,” said Emile Chang, the commission’s deputy executive secretary.