Listing of Indonesian Companies in Hong Kong: Leveraging Hong Kong's Capital Market for Regional Expansion
Key takeaways
- Indonesian companies are currently insignificant in listing overseas. Rough estimates showed that only three Indonesian companies domiciled in Indonesia are currently listed overseas, and none are listed in Hong Kong.[1]
- The Indonesia Stock Exchange (IDX), however, is a very active market, supported by strong IPO momentum over the last few years. IDX has also taken steps to encourage domestic listing, including most recently setting up the New Economic Board.
- A rough estimate using Refinitiv data suggests that more than 70% and 25% of companies now currently listed on IDX meet the minimum capital requirement for listing on Hong Kong's GEM and Main Board respectively, which implies that there is a huge potential pool of candidates for dual primary and secondary listing.
- With strong economic, cultural and business links between Indonesia and Hong Kong, many Indonesian enterprises see Hong Kong as a prestigious listing destination. More promotion and active outreach will be necessary to encourage Indonesian companies to list on HKEX.
- With rapid economic development in Indonesia in recent decades, as well as further regional economic integration initiatives such as the RCEP, Indonesian companies are stepping up their regional expansion. Investors from all around the world, particularly from mainland China and Hong Kong, are also increasingly interested in investing in Indonesia and ASEAN as a whole.
- Interviewees highlighted various sectors with good potential for Indonesian companies’ listing in Hong Kong, including mining and resources, consumer goods, advanced agriculture, REIT and IT/hi-tech sectors. Hong Kong’s recent changes in listing rules for overseas issuers, as well as the new SPAC regime, should help to encourage this. As the Chief Executive highlighted in his latest Policy Address, the HKEX will also amend the Main Board listing rule to facilitate listings of advanced technology enterprises which have yet to meet the profit and trading record requirements, and revitalise GEM to provide small and medium enterprises (SMEs) and start-ups with a more effective fundraising platform. These reforms will further strengthen Hong Kong’s position as an ideal listing destination for fast-growing Indonesian companies.
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