Glencore's HK exit sends message to Aramco
Hong Kong
GLENCORE'S departure from Hong Kong is a reminder of the futility of extra listings. Coach, Japan's Fast Retailing and others could be forgiven for following the Swiss mining and commodities trading group off the island. It's also a sign that Saudi Aramco can cross Hong Kong off its list.
When boss Ivan Glasenberg took Glencore public in 2011, it was the first to twin a primary listing in London with a secondary one in Hong Kong. The idea was to attract a broader range of Asian investors.
Trading in Glencore never revved up beyond the initial flurry, however. In the early days, Hong Kong accounted for about 10 per cent of the London volume. Aside from one brief stretch when the company was in turmoil in 2015, though, the amount of turnover has been negligible.
In Johannesburg, where Glencore has another secondary listing, it is tapping fund managers with limited international options. Not so in Hong Kong, where the decline in trading squares with research that investors prefer deeper markets. Glencore understandably bid adieu on Tuesday, saying it would withdraw its Hong Kong listing at the end of January. Others haven't found much use there either. Brazil's Vale decamped last year. British insurer Prudential, which technically has a dual-primary listing, says only a tiny fraction of its shares trade in Hong Kong. It wouldn't be surprising to see others opt to save some money and paperwork and pack up soon, too.
For Aramco, the Saudi oil titan shopping for venues on which to debut its shares, Hong Kong would make sense politically. China is set to become the world's largest oil importer this year.
Charles Li, the Hong Kong bourse's chief executive, is also pitching access to mainland cash. He's touting an expansion of the Stock Connect programme as a gateway. Even so, the Saudi flotation, in line to be the biggest in history, would hardly seem to need the extra help. Glencore's farewell from the Pearl of the Orient merely increases the chances that Aramco will avoid ever saying hello. REUTERS
