Hong Kong Builds 'Patient Capital' Ecosystem To Foster Technology

By Lee Shih Ta

“Without innovation and technology, there is no future” says John Lee Ka-chiu, Hong Kong’s leader. As a global financial and commercial hub, Hong Kong has been transforming itself into a technology-driven innovation center in recent years, in line with Mainland China’s policy of cultivating “new productive forces” and creating a new driving force for development led by technology. Through its steady accumulation of capital and introduction of talent focused on key industries, an ecosystem of “patient capital” is rapidly taking shape.

“Patient capital” refers to capital that has a longer-term outlook on returns and a higher tolerance for risk. It doesn’t prioritize short-term gains, but instead puts more focus on projects or investment activities with long-term returns. And investment plans don’t get derailed by short-term market fluctuations.

Hong Kong’s financial markets have always been a rich source of direct financing for the Mainland’s technology companies, attracting global patient capital to participate in such investment while promoting international exchange and cooperation. The city has become an important place where domestic and foreign “patient capital” can come together.

Technology-Driven At The Core

Science and technology are at the heart of Hong Kong’s ambitions. But such ambitions have sputtered for years in the city due to factors like high office rents and human resource costs. Compared with neighboring Guangzhou and Shenzhen, Hong Kong was never a first choice for world-class technology companies and talent. However, the city is trying to change that by adopting a more proactive approach in recent years.

The current Hong Kong administration has made plans to actively promote such companies from its first day. It established Hong Kong Investment Corp. Ltd. in 2022 and launched its HK$30 billion ($3.85 billion) “Co-investment Fund” and integrated “Hong Kong Growth Portfolio,” as well as its “Greater Bay Area Investment Fund” and “Strategic Tech Fund.” Such funds will invest in enterprises or projects that can enhance Hong Kong’s competitiveness and industrial diversification.

The Hong Kong government also established a New Industrialization Development Office in 2023 and set up a HK$10 billion New Industrialization Acceleration Scheme. It is currently preparing to set up a third InnoHK research cluster focused on innovation-driven R&D. And Lee announced the establishment of a HK$10 billion “Innovation and Technology Industry Oriented Fund” in his latest policy address.

Star Companies Settle In Hong Kong

In November 2024, the Hong Kong government signed contracts with a third batch of 17 key enterprises that agreed to set up bases in the city, including intelligent speech technology company iFlytek (002230.SZ), life and health technology company Pharmaron (3759.HK; 300759.SZ), and advanced manufacturing company Pudu Robotics. So far, 62 key enterprises from three batches have signed contracts to set up operations in Hong Kong, which is expected to bring a total investment of about HK$42 billion and create more than 17,000 jobs.

Meanwhile, Hong Kong financial markets continue to play their role, attracting a growing number of “companies with new productive forces.” Many of those were on display at the recently held 11th edition of the “Top 100 Hong Kong Listed Companies” awards, which included companies with the greatest potential for developing “new productive forces.”

The event’s main list of “Top 100 Comprehensive Strength” companies selects publicly traded firms with strength across five areas, including trading volume, total market value, profits, return on equity and total return rate. The average operating revenue of the listed companies on the list is HK$340 billion, the average net profit after tax is HK$40 billion, and the average ROE is 15.35%. Companies on the shortlist all showed strong profitability.

In addition to industry giants Tencent (0700.HK), Alibaba BABA, and Baidu BIDU, the list also includes electric automakers Li Auto LI and Xiaomi (1810.HK), biotech companies Akeso (9926.HK) and WuXi AppTec (2359.HK; 603259.SH), as well as other internet companies like Meituan (3690.HK) and Trip.com TCOM.

The list demonstrates how the Hong Kong Stock Exchange has helped to nurture some of China’s most innovative technology companies, and Hong Kong financial markets will continue to provide access to capital for such innovative technology companies.

Hong Kong is embracing a new era of innovation led by technology industries and the development of the real economy, said Lillian Cheong Man Lei, the city’s undersecretary for Innovation, Technology and Industry. The Hong Kong government has invested tens of billions of Hong Kong dollars on technology to support the industry’s development and growth.

Hong Kong’s growing ecosystem of local tech companies is attracting more companies and outstanding talent, both local and from abroad, to settle in the city. That will naturally attract more funds to Hong Kong to support the sector, making it more competitive internationally as a global hub with a high-quality industrial chain.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.