Companies domiciled in the Cayman Islands and Bermuda make up nearly half the market capitalization of the Hang Seng index. Here’s a comprehensive report on Hong Kong’s offshore companies from Bloomberg:
As this week’s release of the Panama Papers has shown, most investors like to keep their links to offshore financial centers on the QT. Not so in Hong Kong.
Take a look, for instance, at the front page of the latest annual report from one constituent of the Hang Seng Index, a noodle maker that Chinese consumers know by the cuddly name of Master Kong:
The name helps remind local investors nervous of Beijing that while Tingyi’s main offices are in Shanghai, its legal base is an island 90 minutes’ flight from Miami whose governor is appointed by the Queen of England.That attitude isn’t unique among the city’s businesses. About 45 percent of the market capitalization of the Hang Seng Index consists of companies whose registered offices are in the Cayman Islands or Bermuda — including its largest constituent by weighting, Tencent, and all the main firms in Li Ka-Shing’s Cheung Kong empire.
Companies domiciled in the Cayman Islands and Bermuda make up nearly half the market capitalization of the Hang Seng index.
As the past week’s revelations have demonstrated, Hong Kong’s companies are far from alone in carrying out this sort of global regulatory arbitrage.Wolseley, the world’s biggest supplier of plumbing parts, was founded in Australia, earns most of its revenue in the U.S., is listed on the London Stock Exchange, is domiciled in Jersey, and pays its taxes in Switzerland. Pfizer is said to be terminating its $160 billion merger with Allergan after U.S. officials proposed new rules that would make it harder for the group to benefit from low Irish tax rates.
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