Jakarta. Indonesia and Hong Kong on Wednesday saw their respective stock exchanges sign a memorandum of understanding (MoU) on cross-border listings.

Under this MoU, Hong Kong Exchanges and Clearing (HKEX) and the Indonesian Stock Exchange (IDX) will explore opportunities that can have Indonesian businesses list their shares in one of the world’s largest bourses. This includes exploring ways they can harmonize the requirements for the listing. The freshly signed MoU with IDX also encompasses product development as well as partnership in environmental, social, and governance (ESG). 

In an interview with the Jakarta Globe, HKEX chief executive officer Nicolas Aguzin said that Indonesian companies would greatly benefit from getting listed on the Hong Kong bourse.

“Last year, the volume of our market posted 125 billion Hong Kong dollars [approximately $16 billion] per day, coupled with 100 billion Hong Kong dollars per day from what we call northbound [trading], namely people investing in the mainland markets through Hong Kong. That brings the total to over 200 billion Hong Kong dollars per day,” Aguzin told the Globe in Jakarta on Wednesday evening.

The type of investors in Hong Kong also suit Indonesian companies' needs.

“Indonesian companies are growing very fast. It is an emerging market that went from a relatively undeveloped market to a vibrant, developing new economy, digital market. Hong Kong investors have experience in investing in those types of companies because they have seen them in mainland China,” Aguzin said.

According to Aguzin, 100 ASEAN companies have listed their shares in Hong Kong. When asked which of those are from Jakarta, he said: “Some companies are incorporated outside Indonesia, but have businesses in the country. So it is a little difficult to define when we say ‘Indonesian companies’.”

The HKEX recorded 90 initial public offerings (IPO) throughout 2022, raising 104.6 billion Hong Kong dollars. Aguzin said that most of those companies were listed in the second half of the year. He added that HKEX had seen 39 IPOs in 2023 so far. About 110 companies have filed for an IPO and are waiting for approval. Media reports revealed that Indonesian courier company J&T Express announced that they had applied for an IPO in Hong Kong. Aguzin, however, refused to comment on J&T’s IPO plans.

Aguzin spoke of the listing reforms which the HKEX introduced in 2018. HKEX allows pre-revenue biotech companies to raise funds. The reforms also facilitate the listing of new-economy companies with a weighted voting rights structure, which gives certain shareholders more rights than others.

“We have requirements in terms of revenue and profitability, but we have changed them for biotech companies. This allows companies that have zero profit and revenue to raise money. The way biotech works is that you have to go through different stages of [clinical] trials to develop the different drugs,” Aguzin told the Globe.

“Founders of new-economy companies are typically young people. … We have adjusted the voting rights. Companies before [the reforms] that had a weighted voting rights structure could not list in Hong Kong. There is a ‘one share, one vote’ [principle]. We now allow technology companies to have weighted voting rights of up to 10 votes per share,” Aguzin said.

About 260 new-economy companies have been listed in Hong Kong and raised 916.5 billion Hong Kong dollars following the reforms.

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