Hong Hao: On-chain Equities Drive Global Price Discovery, Reduce 'Fragility'

July 31st—At the Binance offline private event, renowned economist Hong Hao discussed Binance's listing of stock contracts for Samsung Electronics, SK Hynix, Hyundai Motors, and the global trend of pricing core assets. He mentioned that by lowering the entry barrier for investors, trading platforms would help these assets become more accessible, diversify investor structure, improve price discovery efficiency, and reduce vulnerability caused by closed-loop and single-structure investors. "One of the core reasons why US stocks have outperformed other markets is capital openness," commented Hong Hao, stating that "it is a good thing that more assets can expand their user base."

Hong Hao also pointed out that the value of listed companies is ultimately determined by their profitability, and the arbitrage mechanism in the global market will drive prices back to equilibrium. Unlike assets like gold and Bitcoin, whose prices are formed through market trading, listed companies can generate continuous cash flow, and therefore, their value can be calculated through discounted future earnings. Regardless of whether a company is traded in Korea, the US, or other markets, its intrinsic value does not change due to the listing location. "Arbitrage actions will continuously eliminate this price difference, driving the convergence of prices for the same asset in the global market."

Regarding financial innovations such as on-chain stocks, Hong Hao believes that encryption technology is pushing the global capital market towards a 24-hour on-chain trading era, fundamentally enhancing the efficiency of global price discovery, which is also a significant manifestation of financial innovation. He also noted that financial innovation and regulatory easing go hand in hand, and historical experience has shown that a grand narrative, credit expansion, and regulatory relaxation are the three essential key factors in the prosperity cycle of the financial market.