Hong Hao: On-chain stocks drive global price discovery and reduce "vulnerability"

At Binance’s offline private gathering, renowned economist Hong Hao shared insights on topics including Binance’s launch of stock contracts for Samsung Electronics, SK Hynix, and Hyundai Motor, as well as global pricing trends for core assets. Hong stated that trading platforms lowering entry barriers for investors will help make these assets more open, diversify investor bases, boost price discovery efficiency, and reduce vulnerability caused by closed-off structures and homogeneous investor groups. “One of the core reasons why U.S. stocks have thrived compared to other markets is capital openness,” Hong commented, adding that expanding access to more asset classes is a positive development. Hong further pointed out that the value of a listed company is ultimately determined by its profitability, and the global market’s arbitrage mechanism will drive prices to converge. Unlike assets such as gold and Bitcoin, which derive their prices from market trading, listed companies generate consistent cash flows, so their value can be calculated by discounting future earnings. A company’s intrinsic value does not change regardless of whether it trades in South Korea, the U.S., or any other market. “Arbitrage activities will continuously eliminate such price gaps, driving the convergence of the same asset’s price across global markets,” he said. When discussing financial innovations like on-chain stocks, Hong argued that crypto technology is pushing global capital markets toward a 24-hour on-chain trading era, which essentially enhances the efficiency of global price discovery and represents a key manifestation of financial innovation. He also noted that financial innovation and regulatory relaxation are two sides of the same coin, and historical experience shows that grand narratives, credit expansion, and regulatory relaxation are three essential factors in financial market boom cycles.