Brazilian, Hong Kong Bourses in Talks About Offshore Initial Public Offers

Hong Kong Exchanges & Clearing Ltd. has held talks with Brazil’s bourse over potential listings, according to Hong Kong Exchanges’ Chairman Ronald Arculli.

The discussions have revolved around the listing of Brazilian companies in Hong Kong as well as Hong Kong companies in the South American country, Arculli said. He was speaking along with Chief Executive Officer Charles Li at a cocktail reception in Hong Kong today to celebrate the 10th anniversary of the trading debut of Hong Kong Exchanges’ shares.

“We’re exchanging views,” said Arculli, who plans to visit Brazil in December. “There’s no decision made yet. We are interested in the same direction and agree it’s something doable.”

Arculli said the Hong Kong exchange had received more than 60 applications for initial public offerings. In addition to Hong Kong and Chinese firms, the exchange has been courting companies from Russia, Mongolia and Australia as well as Brazil and Nigeria, executives have said this year.

Li said the exchange is working toward becoming a venue for the trading of products denominated in yuan, the Chinese currency also referred to as the renminbi or RMB.

“No matter for what kind of products, we need massive fund flow,” said Li. “The key to success is to secure enough RMB flow in Hong Kong. Such flow can only come from China.”

Li said while Hong Kong is able to offer a suitable environment for such trades, the major challenge is convincing mainland Chinese policy makers that the risks of internationalizing the yuan are manageable.

“The key is to get the train going,” Li said. “The initial stage is going to be slow. So we need to be patient.”

Arculli said he was hopeful the exchange would be able to develop an “active” yuan debt market.

Shares in Hong Kong Exchanges closed at HK$126.40 today, up 33 times since its debut by way of introduction on June 27, 2000. The stock had a nominal debut price of HK$3.88 back then.

Editors: Nick Gentle, Dirk Beveridge.

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net

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