Hong Kong plays a vital role in promoting overseas mergers, acquisitions (M&A) and restructuring of Shenzhen-based companies as more industry players seek to expand their global footprint, experts said.

Shenzhen issued an action plan on Wednesday promoting high-quality development of M&A and restructuring from 2025-27.

According to the draft plan, which is under public consultation, leading companies from various industries in Shenzhen will be encouraged to merge and acquire assets outside the Chinese mainland. By listing in Hong Kong or refinancing, the efficiency of M&A and restructuring of such enterprises could be enhanced, enabling them to better capitalize on the two markets.

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The document also stated its support for Shenzhen and Hong Kong to cooperate in setting up investment funds related to M&A and restructuring. Domestic and international financial institutions are encouraged to invest in the application of scientific and technological achievements.

Shi Weigan, executive deputy director of the finance committee office of the Shenzhen Municipal Party Committee, said Shenzhen will take advantage of the benefits provided by Hong Kong’s capital market and give full play to its industrial strengths to promote the connectivity of M&A and restructuring projects as well as financial products.

The policy release came two months after the China Securities Regulatory Commission, the country’s top securities watchdog, announced new measures aimed at guiding M&A among listed companies, making Shenzhen the first Chinese city to unveil related measures following the top-level move.

“As a growing number of leading enterprises in Shenzhen go global, it has become a trend to utilize international resources to enhance their competitiveness,” said Yu Lingqu, deputy director of the Department of Financial Development and State-owned Assets and State-owned Enterprise Research at China Development Institute, a Shenzhen-based think tank.

“Hong Kong, on one hand, can play the role of an international financial center to support mainland enterprises in obtaining financing and services such as asset management and risk management, and on the other hand, it can leverage its professional services expertise to help mainland enterprises get international resources with international standards,” he told China Daily.

Shenzhen and Hong Kong are highly complementary, Yu noted. Shenzhen has leading companies, a sound industrial chain and is capable of transforming scientific and technological achievements, while Hong Kong has the advantages of internationalized professional services, abundant capital, universities and original innovation capacity, he said.

“Shenzhen enterprises can use Hong Kong as a platform for M&A to gain better access to high-end production factors.” Yu said.

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Yu stressed the importance of enhancing connectivity of capital, information and talent, and setting up a cooperative platform to reduce the information gap and systemic differences between the two sides. This will enhance the convenience and success rate of transactions, he said.  

The plan also supports the Shenzhen Stock Exchange to strengthen cooperation with its Hong Kong counterpart in deepening equity and debt financing as well as connectivity of M&A and restructuring systems and mechanisms.

The tech hub aims to achieve 15 trillion yuan ($2.1 trillion)in total market capitalization of its companies listed in domestic and foreign markets by the end of 2027. At least 100 M&A and restructuring projects are tasked to be completed by that time, with the total value of transactions exceeding 30 billion yuan.

According to Citic Securities, the number of public firms in Shenzhen that are listed both on the mainland and in Hong Kong has reached 15.

With the Hong Kong market open to global investors, its internationalization and mature market system provide a good platform for Shenzhen-listed companies to showcase themselves to overseas stakeholders, which can exert a positive effect on their outbound M&A activities, the brokerage said in a reply to China Daily.

Meanwhile, the valuation system for Hong Kong’s securities market is more internationalized. The valuation of Shenzhen’s leading enterprises after listing in Hong Kong can reflect their international competitiveness and market value to a certain extent, which will help Shenzhen companies be better understood and accepted by overseas targets, and enhance the success rate of M&A, it said.

Contact the writer at sally@chinadailyhk.com