09 Aug/18

The Hong Kong Stock Exchange and the English Language

The Hong Kong Stock Exchange and the English Language
The Hong Kong Stock Exchange and the English Language

Some have called this century the Pacific century. Whereas statements like this are exceedingly broad and since we are not even into the first 20 years of the century, there’s no arguing with the fact that, in terms of overall market size as well as market growth and maturity, the Pacific Rim countries will definitely have an increasing presence in the global economy.

As could be expected, the largest potential player in all of this is China. Even though China is expected to be a heavyweight, there are questions of whether China’s mainland stock exchange is currently ready and able to handle being in the spotlight. As these questions remain, the crown jewel of China, Hong Kong, appears poised to become the gateway through which China will financially connect with the world.

With a securities market that can be traced back 150 years and a stock exchange that was first set up in 1891, Hong Kong has the size and structure necessary to handle such a massive undertaking. In terms of market capitalization, the Stock Exchange of Hong Kong is the third largest in Asia (EUR 30 trillion), and also the fastest growing, offering over 2100 listings from Hong Kong, China, and the Pacific Rim. Looking at structure, Hong Kong maintains a sound regulatory regime, international corporate governance standards, transparency, and a well-established legal system: it’s no wonder that Hong Kong has been the #1 global IPO venue for 5 of the last 9 years.

Appealing to international finance is, however, only half of the solution; the other half lies in offering market access to mainland China. Hong Kong achieves this ideal meeting through programs like Stock Connect, which links and allows for cross-border trading of equities on the Shanghai and Shenzhen exchanges, and Bond Connect, which grants international access to China’s interbank bond market. Along with simply offering mainland market access, Hong Kong has become the largest offshore listing venue for mainland Chinese companies, raising HKD 6 trillion since 1993.

Though this sounds like a wonderful fit, that would make both parties happy and successful, there’s a slight catch to it. Looking at HKEX’s Listing Rules and Guidance, specifically under Chapter 18 (Financial Information), the exchange makes it very clear to listed companies that: “The directors’ report, auditors’ report, annual financial statements (including consolidated financial statements) and, where applicable, summary financial report must be in the English language and must be accompanied by a Chinese translation or be in the Chinese language accompanied by an English translation.”

Differing from listing requirements in Shanghai, which state that reports must be in Chinese, and clarifying that, in case of any differences between English and Chinese, only the Chinese will be considered valid, this English requirement in Hong Kong could provide a substantial hurdle for companies who are not accustomed to providing reports in English, such as other Pacific Rim companies or mainland Chinese companies wishing to list in Hong Kong. Conversely, for companies already listed on the exchange, with the influx of international attention being placed on Hong Kong, this could also provide an opportunity to polish their translated English corporate reports in order to potentially attract new clients and investors.

Of course, when it comes to the translation of financial statements and reporting – an important channel for building and maintaining the reputation of your company – it is imperative to rely on Language Service Providers who are proven, experienced, and are willing to customize their services to your needs.

EVS Translations and its in-house English and Chinese finance translators and project managers would be happy to advise you on your translation project in the field of financial reporting.

For more than 25 years, the translation company, with offices across the Globe and an in-house team of 150 translators and project managers, has been translating annual reports for listed companies, banks, and audit firms. In addition to annual reports, the company’s day-to-day business includes annual financial statements, risk reports, IR reports, due diligence reports and quarterly reports.

Want to learn more on how EVS Translations could leverage its terminology and software solutions for the benefit of companies listed on the Hong Kong Stock Exchange?