The brokerage role of Hong Kong in global financial networks: the case of mainland Chinese companies’ US listings

Abstract

This paper explores the prominent and enduring brokerage role of Hong Kong in facilitating mainland Chinese companies' US listings. We argue the brokerage role needs to be interpreted in both global and territorial dimensions. Situating Hong Kong in the global context, it utilises its connectivity in global financial networks, and especially its close tie to the network core, New York, to broker between global and local scales; In its territorial context, Hong Kong's territoriality, configured through its history, socio-economic milieu and regulatory environment, gives it the niche to broker between the western-dominant financial system and the peripheral Chinese local regions.

Mapping global financial networks: a spatial analysis of Chinese companies’ overseas listings

“…New York-Beijing has the largest frequencies of service linkages, and New York-Shanghai, New York-Shenzhen, and New York-Hangzhou are leading city-dyads. Hong Kong-Beijing, Hong Kong-Shanghai, and Hong Kong-Shenzhen respectively rank 4th, 5th, and 10th, demonstrating the prominent bridging role of Hong Kong (Fang et al, 2022; Sigler et al, 2021). Interestingly, Beijing-Beijing ranks 2nd, indicating the growing competitiveness of Beijing as a financial centre.…”

“…This foregrounds our initiative to incorporate the analysis of the regions in need of financing in the empirical analysis of GFNs. First, while the established accounts tend to place a narrow focus on a handful of top financial centres in GFNs such as New York and London, there is a call for investigating of local economies’ integration into GFNs as it could bring other rather peripheral cities and regions into view (Fang et al, 2022). It is noteworthy that in the past 30 year or so, some of these peripheral cities and regions are connected with GFNs via overseas listings (Pan and Brooker, 2014; Wójcik and Burger, 2010) and gaining increasing importance in GFNs’ dynamics.…”

“…Hong Kong is the key financial centre as well as an offshore jurisdiction bridging mainland China and the global financial market (Lai, 2012; Taylor et al, 2014; Fang et al, 2022). The FABS firms in Hong Kong established by western capital (such as Goldman Sachs (Asia) L.L.C.)…”

“…Meanwhile, the locational strategy of many leading mainland Chinese FABS firms have strengthened Hong Kong’s role as an international financial centre. With the increasing integration of China into GFNs, Hong Kong’s role as the only gateway might be challenged, as mainland Chinese companies increasingly have direct access to international FABS firms and financial markets (Fang et al, 2022; Sigler et al, 2021).…”

“…Besides, some cities beyond the above categories might have unique competitiveness in the specific FABS sectors due to particular locational advantages. For instance, many international FABS firms agglomerate in Hong Kong, which has enabled its critical brokerage role in connecting mainland China with overseas markets (Fang et al, 2022).…”