Is Hong Kong Developed Asia Pacific or Emerging Market?

aroominyork

Some categorisations of Hong Kong list the exchange as Developed Asia Pacific while others as an Emerging Market. Is the answer that it depends on the individual company? - if it is HK-based it is Developed AP, and if it is a Chinese company trading as an H-share it is EM?

bowlhead99

HK is a developed market, with the same market sophistication and standards as other developed APAC markets like Australia, Japan, Singapore. 

You are right that there a lot of mainland-China based companies that have H-shares listed in HK, while their primary listing is on the mainland, and the H-shares are created under Chinese law - albeit the listing venue is HK, priced in HKD and they have to follow the HK listing rules to be able to stay listed (IFRS or HK accounting standards, etc).  If you are looking at individual companies which operate in a specific country though, people will generally bucket those companies on where they're operating rather than where they're listed. 

For example Alibaba listed in NYSE as when they were originally IPOing, HK wouldn't agree to their their somewhat unusual governance structure with the shareholders not really being able to vote for all the board seats, while NYSE were OK with it. Last year HK decided they would accommodate different classes of shares and so a secondary listing was made in HK for a few percent of the company.   But Alibaba isn't in MSCI's North American index (just because it happens to be NYSE listed), or their developed Asia index (just because it happens to have a HK listing); it's in the EM index, as it's a fully China-based company headquartered in Hangzhou, despite not having a listing in Shanghai or Shenzhen (having much more investor demand than any other company listed on those exchanges, so they were never going to IPO there). 

Likewise I hold Tencent via its HK listing, but it's seen as an 'emerging markets' company - indeed Tencent and Alibaba between them are over 13% of a typical EM index tracker or over 16% of an MSCI Asia EM tracker, despite neither being listed on a mainland China exchange.

EdGasketTheSecond

If people live in apartment blocks its developed; if they live in mud huts, its emerging.

bowlhead99 take a look at the Chinese hustle, then you'll find out why 'neither is being listed on a mainland China exchange'.