Hong Kong serves as crucial economic link between Russia & China

HONG KONG: Hong Kong serves as a crucial platform to link Russia with the rapidly growing China market, according to the city's stock exchange officials, who spoke at an investment summit on Tuesday.

There has been plenty of buzz in the Hong Kong markets since the stock exchange kicked off 2010 by luring the world's biggest aluminium producer, UC Rusal.

Investors are keen to attract more Russian listings to the territory.

Rusal's US$2.5 billion IPO is Hong Kong's largest so far this year, and its first ever Russian listing.

At the Russia-Capital Raising and Investment Summit on Tuesday, the chairman of Hong Kong's stock exchange said that the city is currently reviewing its listing rules to attract more natural resource firms.

Hong Kong has been keen to cast a wider net following Rusal's listing in January, and this summit further highlights the city's bid to sell itself as an international finance hub, and a key gateway to China.

"One role Hong Kong could (play) is by helping the mainland manage its ample liquidity and the outflow of funds towards productive international investments,” said Ronald Arculli, chairman of the Hong Kong Exchanges and Clearing.

"We therefore welcome more companies from different parts of the world, including Russian firms which want to expand their China or Asia operations, to make use of our platform.”

Last year, about two per cent of total trade between Russia and China was routed through Hong Kong.

According to estimates, trade between Russia and Hong Kong has been growing by an average annualised rate of about 13 per cent since 2005.

"Closer economic links through the readily-accessible Hong Kong market will help foster the stable advancement of Sino-Russian bilateral ties and stimulate two-way trade and investment,” said Arculli.

"It could also pave the way for more breakthroughs and deeper cooperation between both sides as the center of economic gravity shifts gradually, but undeniably from west to east.”

Russian equity analysts project three to five more Russian companies will list on the Hong Kong Stock Exchange in the next two years.