For decades, global investors have treated China as a fragmented market: Mainland China as emerging, Hong Kong as developed, and Macau as too small to matter. This divide reflected the 1997 “one country, two systems” framework that granted Hong Kong a high degree of autonomy. But that separation is increasingly obsolete.
Major developments over the past five years, including the implementation of Hong Kong’s National Security Law and Article 23, have cemented Hong Kong’s integration into China’s centralized governance model. Mandarin is now the language of finance in Central; Chinese banks dominate deal flow; and nearly 80% of Hong Kong’s market capitalization is now linked to Mainland enterprises. In 2025, over two-thirds of IPOs on the Hong Kong Exchange (HKEX) were cross-listings from Chinese companies, a stark contrast to just 2% a few years earlier.
At the same time, multilateral policies now treat Hong Kong, Macau, and Mainland China as a single entity. U.S. investment restrictions, export controls, and sanctions no longer differentiate between them. In practice, China operates as one capital market under a unified system. Yet global benchmarks and portfolios continue to divide exposures, creating structural underweights and distorting investor allocations.
Read the full ‘Sponsored Commentary’ now at the link below
