Hong Kong Exchanges & Clearing Ltd. has met Mongolian mining companies seeking to list in the city, said Chief Marketing Officer Lawrence Fok, who is in the North Asian country for a forum on corporate capital raising.
Hong Kong Exchanges, which operates Asia’s third-largest stock market, is processing more than 70 initial public offering applications from both overseas and local companies, Fok said in an interview in Ulaanbaatar yesterday. He declined to name the Mongolian companies or give a time frame for possible listings.
“Hopefully there will be more companies using Hong Kong as a platform,” Fok said. “Mongolia and other resource-rich countries share the same characteristics of having a small population and massive resources, which would benefit from China’s economic growth and its rising demand for resources.”
Funds raised on the Hong Kong market through initial public offerings surged 276 percent to HK$248 billion in 2009 from a year earlier, the exchange said on March 4. The bourse has been targeting listings from emerging markets, particularly companies in the energy, metals and mining industries.
Energy, mining and resources companies account for about 16 percent of both Hong Kong’s market capitalization and daily trading volume, Fok said. Apart from Mongolia, the Hong Kong stock exchange has also met with companies with assets in Kazakhstan, Tajikstan, Russia and Indonesia, he said.
Between six and eight companies are listed in Hong Kong that possess assets in Mongolia, Fok said. The Hong Kong-traded stock of Vancouver-based SouthGobi Resources Ltd. has slumped 28 percent in the past three months. The company started production at its open-cast coal mine in southern Mongolia last year to meet Chinese demand.
Mongolian companies “have the story about China’s economic growth and its increasing demand for resources,” Fok said.
Major state-owned companies and assets in energy- and infrastructure-related industries are among those that will seek to raise money selling shares in international and local stock exchanges, Mongolian Prime Minister Sukhbaatar Batbold said at a forum in Hong Kong on April 12.
Mongolia’s companies are seeking to raise funds overseas as they struggle to attract investors in a market with thin trading volume.
The average daily turnover of the Mongolian exchange is about $100,000 this year, according to Khangai Altai, chief operating officer of the Mongolian Stock Exchange. That compares with HK$64 billion in Hong Kong, according to data compiled by Bloomberg.
--Editors: Darren Boey, John McCluskey.