(Yicai Global) April 7 -- The Hong Kong stock market is expected to attract more international capital, bringing greater liquidity, according to Zhu Jia, co-head of Asia private equity at Bain Capital.

Yicai Global spoke with Zhu in Shanghai recently. Excerpts from the interview follow.

Yicai Global: The Chinese investors we have spoken with have indicated that they will gradually switch their holdings of American depositary receipts to the Hong Kong stock market. Will this trend continue and what will change for investors?

Zhu Jia: This is something that must be considered. The Hong Kong stock market is good but still needs further development to adapt to investors’ needs.

First, as more companies go public in Hong Kong, the capital scale of its stock market is expected to expand, thereby attracting more international capital. Second, it is relatively easier for investors to pull out by listing the company in the United States stock market.

The Hong Kong stock market itself has some problems caused by insufficient regulation and lack of investors and market liquidity, which requires further development to meet the needs of investors.

YG: For the Hong Kong market, is it an opportunity but also a challenge?

Zhu: In terms of opportunity, the demand does exist, since more companies are going public. At the same time, the Hong Kong bourse is also changing. For example, the new listing rules of the Hong Kong Stock Exchange allow biotechnology companies with no profit and no revenue to list, meaning some biopharmaceutical companies that did not meet the listing requirements before can now be listed.

The challenge lies in whether investors or regulators are more receptive to different industries and whether there is enough willingness to go in for trial and error of new business models. For example, companies developing autonomous driving can be listed in the US but cannot meet the requirements of Hong Kong listing rules.

YG: For Chinese companies, what are the opportunities and challenges in reshaping the global supply chain during the pandemic?

Zhu: The global supply chain has always been dynamic and evolving, and we cannot look at it from a static perspective. Therefore, Chinese companies still need to be forward-looking. In the past, being close to the market and cost reduction were probably the priorities. Now, in addition to economic factors, aspects like public health, geopolitics and trade have to be taken into account.

Today, already many Chinese companies have put their manufacturing layout around the world. Some say that Vietnam has become one of the important manufacturing bases in the world. Chinese companies also have a lot of investment in Vietnam.

Editor: Peter Thomas