Landheer of HKEx: Liquidity attacks more Mongolia IPOs
Mr. Eric Landheer eats very carefully in Ulaanbaatar, Mongolia. He never tries the famous tsagaan idée. He can drink lot vodka but a glass of shimin arkhi will let him down. As an allergic patient to milk products, Ulaanbaatar should not be a destination for him. However it is the fifth visit since February this year for the Senior Vice President, Head of Issuer Marketing Department of Hong Kong Stock Exchange. He has very positive prospect in Mongolia and wants to attack more IPOs.
In the “Mongolia Capital Raising & Investment Conference”, organized by Frontier Securities in Ulaanbaatar from June 6-8, the success of the IPO of Mongolia Mining Corporation (MMC, 0975.HK) is frequently mentioned while Mr. Chuluunbat Ochirbat, the Parliament Member of Mongolia expressed his favor to HKEx in his speech and said Hong Kong is the best place of the oversea listing of Mongolia companies.
Landheer is not only one from the oversea exchanges. The senior representatives of London Stock Exchange, Korea Exchange, Tokyo AIM, Frankfurt Stock Exchange, XETRA of Deutsche Börse AG tell their stories to attract Mongolia companies.
In the interview with Quamnet (media partner of the event) and Frontier Securities, Landheer expresses HK as the Asia financial center offers unique propositions in terms of its liquidity, in terms of its diverse, institutional investor base as well as the retail investor base, the ability to resolve extremely large fund offerings, the liquidity that presents for companies in the sequence of raise capital in HK.
Comparing with London Stock Exchange, Landheer thinks London has some disadvantages because it’s not the same time zone with Mongolia and he believes the companies listed in HK are going to benefit from liquidity in terms of price discovery mechanisms.
He also talked about the major obstacles. One of them is the companies have to demonstrate a very strong accounting background that the financial was the track weapon they need to experience. In addition, currently HKEx recognizes 22 jurisdictions but Mongolia is not one of these. MMC is a Cayman Island company.
Enclosed is the dialogue.
Q: Here is the Frontier Securities Annual Conference 2011 in Mongolia, and I am jointed by Eric Landheer, Senior Vice President, Head of Issuer Marketing Department of Hong Kong Stock Exchange. Mr. Landheer, we all know that Mongolia Mining Corporation has very successful performance in HK stock market. Can you talk about that, or did you learn some lessons from that?
Landheer: I think it really demonstrates that HK investors, particular the local investors and international and institutional investors that are in Hong Kong have a strong appetite for the Mongolia coal storage. Whether they are from the commodity side or the side to afford the commodity, but the growth economy in Mongolia is as a whole. So I think that show their demonstrations of their commitment to Mongolia, their interest and invest in Mongolia, and Mongolia as an overall coal storage.
Q: Why do you think companies from Mongolia should list overseas? Did you see some specific advantages of HKEx?
Landheer: I feel HK is a unique position to serve as a true platform for companies from Mongolia to list. Hong Kong in many ways is the financial center of Asia right now, and I believe it offers unique propositions in terms of its liquidity, in terms of its diverse, institutional investor base as well as the retail investor base, the ability to resolve extremely large fund offerings, the liquidity that presents for companies in the sequence of raise capital in HK. I think all of these factors are unmatched by any other Asian exchange and I would say by many other exchanges around the globe today.
Q: Did you see some obstacles for Mongolia companies?
Landheer: One of the major obstacles is obviously the companies have to demonstrate a very strong accounting background that the financial was the track weapon they need to experience, or put into place to demonstrate to investors. In addition, currently we recognize 22 jurisdictions, right now Mongolia is not one of these, although we know it is something we’re looking at. So the companies go through the process, all going to be able to raise capitals in HK very successfully.
Q: How do you think the future from the stock market perspective?
Landheer: I can’t speak in terms of the overall stock markets perspective, but I can say we are extremely interested in Mongolia and attracting quality Mongolia companies to list in Hong Kong. This is actually my fifth trip to Mongolia since February, so I feel like I’ve spent more time here than many other places, perhaps HK. I’ve done marketing and a lot of trips to other places around the globe, and Mongolia is the focus for us. Not in the commodity’s base, but also in terms of the overall infrastructure, the entire economic system, of course we will support the growth of wealth and the creation of wealth here overall. And also in other industries we will support them in the commodities’ base and Mongolian’s increase presents in the world right now.
Q: Could you talk about the general strategy of the HK exchange? How do you position yourself among your peers, maybe the mainland?
Landheer: We are not in a competition with the mainland exchanges. We have more of a friendly cooperation with Shanghai and Shenzhen stock exchange competition in some level. In the latest 5-year plan issue by the central government, it’s very clear that they continue to see HK as a major important financial center. So HK continue to run its major function as the Asian financial center and one of the major global financial centers as well. So in terms of our position I can speak of the Asian market side, really what we were doing was focusing on tracking quality companies, quality international companies to the HK exchange. If you look at it 3 years ago, 2007, 85% of the funds raise, like IPO funds raise, were raised by mainland related classes. If you look at last year, 2010, 45% of the funds raise was raised by international companies.
So obviously we are going to continue the focus on the strength we had in Mainland China, but more importantly, we are continuing to focus on building our international business as well. This is the key aspect of what we plan on and that’s why I was brought to exchange. The other thing I would say is that we also need to focus on RMB fund raising, we’ve been designated as the offshore center for RMB international organization and we continue to work on capitalizing on that advantage and we have not only the first advantage on that face but also as part of China, we have separate legal and financial systems, we believe we can take the advantage of the international organizations of the RMB. That will be RMB IPO or secondary offerings in RMB currency. We think we will position to do that and we have proved an operational readiness to do so. And we expect to see several companies raising RMB in their IPOs as well as their secondary’s.
Q: I know you also travelled a lot in Europe to invite the famous European brand names to be listed in HK. The international investors do not know a lot about Mongolia companies. Do you have any suggestions how the big names of the Ulaanbaatar can be well known to the international investors?
Landheer: First of all, be listing in HK stock exchange. Secondly I would say they need to ensure they put the right advisory in place, whether that will be local investment banks here or banks focusing on Mongolia. I think they need to focus on the financials and making sure the financials are in line with international standards. They need to make sure they have the right advisory in place and they work that advice to ensure that they’re doing the job they should be doing.
Q: Shanghai Stock Exchange will launch the international board soon. Will it be the competitor of HK for the IPOs of international companies?
Landheer: I know the bottom line is Shanghai will launch an international board, very different from the types of fund raising that you can do in HK. I think they initially look into attract the companies will not necessarily going after. So I don’t think there is much overlaps there, maybe they can attract what we’ve already attracted or continue to pursue this juncture. In addition, the rules they’ve been made public, there’re still some questions in terms of how you be able to raise funds, how you be able to repay those funds, how can you use those funds, all of these are interesting points that Shanghai international board needs to address.
Q: How about London Stock Exchange? You know the commodity market is very active in London.
Landheer: I think London has some disadvantages because it’s not the same time on first of all. I believe the companies listed here in Mongolia and HK are going to benefit from liquidity in terms of price discovery mechanisms. So being in the same time, with the overlapping times on, with the Asian investors base as well as the international investors base. You can get various investors, like UK and US investors in HK, you don’t need to list in the US and UK to do so. London will do very well here, but we feel we offer special proposition.
Q: How about Australian and Korean’s competition? Austrlia is a mining country while Korea Stock Exchange is stake holder of Mongolia Stock Exchange. How can you get more outstanding?
Landheer: We work in competition. The bottom line is that I feel we’re true Asian financial center, we’re the international financial center in Asia, and we have liquidities that are outstanding.
In the “Mongolia Capital Raising & Investment Conference”, organized by Frontier Securities in Ulaanbaatar from June 6-8, the success of the IPO of Mongolia Mining Corporation (MMC, 0975.HK) is frequently mentioned while Mr. Chuluunbat Ochirbat, the Parliament Member of Mongolia expressed his favor to HKEx in his speech and said Hong Kong is the best place of the oversea listing of Mongolia companies.
Landheer is not only one from the oversea exchanges. The senior representatives of London Stock Exchange, Korea Exchange, Tokyo AIM, Frankfurt Stock Exchange, XETRA of Deutsche Börse AG tell their stories to attract Mongolia companies.
In the interview with Quamnet (media partner of the event) and Frontier Securities, Landheer expresses HK as the Asia financial center offers unique propositions in terms of its liquidity, in terms of its diverse, institutional investor base as well as the retail investor base, the ability to resolve extremely large fund offerings, the liquidity that presents for companies in the sequence of raise capital in HK.
Comparing with London Stock Exchange, Landheer thinks London has some disadvantages because it’s not the same time zone with Mongolia and he believes the companies listed in HK are going to benefit from liquidity in terms of price discovery mechanisms.
He also talked about the major obstacles. One of them is the companies have to demonstrate a very strong accounting background that the financial was the track weapon they need to experience. In addition, currently HKEx recognizes 22 jurisdictions but Mongolia is not one of these. MMC is a Cayman Island company.
Enclosed is the dialogue.
Q: Here is the Frontier Securities Annual Conference 2011 in Mongolia, and I am jointed by Eric Landheer, Senior Vice President, Head of Issuer Marketing Department of Hong Kong Stock Exchange. Mr. Landheer, we all know that Mongolia Mining Corporation has very successful performance in HK stock market. Can you talk about that, or did you learn some lessons from that?
Landheer: I think it really demonstrates that HK investors, particular the local investors and international and institutional investors that are in Hong Kong have a strong appetite for the Mongolia coal storage. Whether they are from the commodity side or the side to afford the commodity, but the growth economy in Mongolia is as a whole. So I think that show their demonstrations of their commitment to Mongolia, their interest and invest in Mongolia, and Mongolia as an overall coal storage.
Q: Why do you think companies from Mongolia should list overseas? Did you see some specific advantages of HKEx?
Landheer: I feel HK is a unique position to serve as a true platform for companies from Mongolia to list. Hong Kong in many ways is the financial center of Asia right now, and I believe it offers unique propositions in terms of its liquidity, in terms of its diverse, institutional investor base as well as the retail investor base, the ability to resolve extremely large fund offerings, the liquidity that presents for companies in the sequence of raise capital in HK. I think all of these factors are unmatched by any other Asian exchange and I would say by many other exchanges around the globe today.
Q: Did you see some obstacles for Mongolia companies?
Landheer: One of the major obstacles is obviously the companies have to demonstrate a very strong accounting background that the financial was the track weapon they need to experience, or put into place to demonstrate to investors. In addition, currently we recognize 22 jurisdictions, right now Mongolia is not one of these, although we know it is something we’re looking at. So the companies go through the process, all going to be able to raise capitals in HK very successfully.
Q: How do you think the future from the stock market perspective?
Landheer: I can’t speak in terms of the overall stock markets perspective, but I can say we are extremely interested in Mongolia and attracting quality Mongolia companies to list in Hong Kong. This is actually my fifth trip to Mongolia since February, so I feel like I’ve spent more time here than many other places, perhaps HK. I’ve done marketing and a lot of trips to other places around the globe, and Mongolia is the focus for us. Not in the commodity’s base, but also in terms of the overall infrastructure, the entire economic system, of course we will support the growth of wealth and the creation of wealth here overall. And also in other industries we will support them in the commodities’ base and Mongolian’s increase presents in the world right now.
Q: Could you talk about the general strategy of the HK exchange? How do you position yourself among your peers, maybe the mainland?
Landheer: We are not in a competition with the mainland exchanges. We have more of a friendly cooperation with Shanghai and Shenzhen stock exchange competition in some level. In the latest 5-year plan issue by the central government, it’s very clear that they continue to see HK as a major important financial center. So HK continue to run its major function as the Asian financial center and one of the major global financial centers as well. So in terms of our position I can speak of the Asian market side, really what we were doing was focusing on tracking quality companies, quality international companies to the HK exchange. If you look at it 3 years ago, 2007, 85% of the funds raise, like IPO funds raise, were raised by mainland related classes. If you look at last year, 2010, 45% of the funds raise was raised by international companies.
So obviously we are going to continue the focus on the strength we had in Mainland China, but more importantly, we are continuing to focus on building our international business as well. This is the key aspect of what we plan on and that’s why I was brought to exchange. The other thing I would say is that we also need to focus on RMB fund raising, we’ve been designated as the offshore center for RMB international organization and we continue to work on capitalizing on that advantage and we have not only the first advantage on that face but also as part of China, we have separate legal and financial systems, we believe we can take the advantage of the international organizations of the RMB. That will be RMB IPO or secondary offerings in RMB currency. We think we will position to do that and we have proved an operational readiness to do so. And we expect to see several companies raising RMB in their IPOs as well as their secondary’s.
Q: I know you also travelled a lot in Europe to invite the famous European brand names to be listed in HK. The international investors do not know a lot about Mongolia companies. Do you have any suggestions how the big names of the Ulaanbaatar can be well known to the international investors?
Landheer: First of all, be listing in HK stock exchange. Secondly I would say they need to ensure they put the right advisory in place, whether that will be local investment banks here or banks focusing on Mongolia. I think they need to focus on the financials and making sure the financials are in line with international standards. They need to make sure they have the right advisory in place and they work that advice to ensure that they’re doing the job they should be doing.
Q: Shanghai Stock Exchange will launch the international board soon. Will it be the competitor of HK for the IPOs of international companies?
Landheer: I know the bottom line is Shanghai will launch an international board, very different from the types of fund raising that you can do in HK. I think they initially look into attract the companies will not necessarily going after. So I don’t think there is much overlaps there, maybe they can attract what we’ve already attracted or continue to pursue this juncture. In addition, the rules they’ve been made public, there’re still some questions in terms of how you be able to raise funds, how you be able to repay those funds, how can you use those funds, all of these are interesting points that Shanghai international board needs to address.
Q: How about London Stock Exchange? You know the commodity market is very active in London.
Landheer: I think London has some disadvantages because it’s not the same time on first of all. I believe the companies listed here in Mongolia and HK are going to benefit from liquidity in terms of price discovery mechanisms. So being in the same time, with the overlapping times on, with the Asian investors base as well as the international investors base. You can get various investors, like UK and US investors in HK, you don’t need to list in the US and UK to do so. London will do very well here, but we feel we offer special proposition.
Q: How about Australian and Korean’s competition? Austrlia is a mining country while Korea Stock Exchange is stake holder of Mongolia Stock Exchange. How can you get more outstanding?
Landheer: We work in competition. The bottom line is that I feel we’re true Asian financial center, we’re the international financial center in Asia, and we have liquidities that are outstanding.
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