By Saumya Vaishampayan

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 21, 2018).

The head of Hong Kong's stock exchange said he believes Saudi Arabian state-owned oil giant Aramco will eventually need to list in Hong Kong, despite news that its highly anticipated initial public offering is likely to take place on its domestic market.

Charles Li, chief executive of Hong Kong Exchanges and Clearing Ltd., said Tuesday that while he doesn't know when Aramco will go ahead with its IPO -- which analysts estimate could value the company at up to $2 trillion -- the exchange continues to have conversations with relevant stakeholders.

"If it does happen, we believe it will ultimately choose Hong Kong," he said on the sidelines of the Credit Suisse Asian Investment Conference in Hong Kong. Aramco "may or may not choose Hong Kong at the time of the IPO, but Hong Kong...is one of the markets they absolutely will need and will benefit from."

The Wall Street Journal reported Monday that Saudi Arabia is moving ahead with a listing next year on the Saudi stock exchange only, while taking more time to decide whether an international venue is worthwhile. Saudi officials say a listing in Hong Kong remains in contention, provided China becomes a cornerstone investor in the company.

Major exchanges around the world are vying to win IPOs -- like the potential Aramco deal -- at a time when many highly valued companies are choosing to stay private for longer periods of time. Hong Kong's stock exchange is advancing a plan that would allow companies to float -- even if they have structures that restrict ordinary shareholders' voting rights and give their founders greater voting power.

In a speech at the conference, Mr. Li addressed the potential for China to let foreign-listed companies issue depositary receipts so they can be traded on mainland Chinese stock markets.

The issuance of depositary receipts would allow buzzy technology giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd. to bypass current Chinese law prohibiting firms incorporated overseas from going public in mainland China.

Everybody is "waiting for the rules to come out to see exactly how it's going to work," he said, adding that was too soon to tell how big an impact any changes would have on markets.

The broadest change could come if new rules lead to the adoption of foreign practices in the Chinese market, which probably won't happen right away, he said.

"If that happens, the domestic market is a very different market," he added.

Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com

(END) Dow Jones Newswires

March 21, 2018 02:47 ET (06:47 GMT)

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