Hong Kong’s financial regulators have pledged to ease the listing requirements for companies based in mainland China, noting that these firms view the city’s stock market as a source of funding to support their ambitions to operate globally.
Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, said on Thursday, February 13, that the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing Limited (HKEX) are studying ways to fine-tune the existing rules for the initial public offering (IPO) of shares.
The market watchdog and the bourse operator would propose changes in the current year. It is already known that the relevant changes will relate to lowering the threshold of raising funds, optimizing the market structure, and improving corporate governance. About this Christopher Hui Ching-yu told during the conference in Shenzhen. At a meeting of the Shenzhen-Hong Kong Financial Cooperation Committee, he stated that regulators are conducting comprehensive studies and will unveil proposed measures to improve the existing fundraising system during the current year. It was also noted that the mentioned institutions hope to further maintain mainland companies in obtaining capital, including firms from Shenzhen.
The specified committee, established in June last year, focuses on the financial ties between the two cities and the development of the financial infrastructure of the Greater Bay Area.
The media reported that the announcement made by Christopher Hui Ching-yu on Thursday is expected to be a kind of trigger for enthusiasm among mainland Chinese companies for IPOs in Hong Kong. The relevant assumption is based on the fact that the mentioned firms seek to raise additional capital to expand their operations.
It is worth noting that the Hong Kong IPO market is currently on a gradual recovery trajectory. For several years, this market has been in the condition of downturn. The current recovery is due to the increasing number of companies from mainland China that are listed in Hong Kong.
Bonnie Chan Yiting, chief executive officer of HKEX, said about 100 firms were in the IPO pipeline.
Christopher Hui Ching-yu said at the meeting that Hong Kong’s high-quality and international professional services sector can further liberalize the mainland’s financial markets.
It is worth noting that over the past two years, regulators in Hong Kong and mainland China have stated the importance of closer links between capital markets and underlined that this will help support the Chinese economy. Also, in the context of the relevant rhetoric, special attention was paid to the role of Hong Kong as a bridge between the mainland and global markets. In this case, regulators pledged to create more cross-border schemes that will increase capital flows.
Ivan Li, a fund manager at Loyal Wealth Management in Shanghai, said that companies from mainland China, especially those interested in internationalizing their businesses, would treat Hong Kong as the top choice for raising funds. Also in this context, it was noted that most of the mentioned firms are eager to find out to what extent Hong Kong regulators will lower listing requirements and streamline application procedures.
Carlson Tong Ka-shing, HKEX chairman, said this month that the exchange received 30 IPO applications in January, including seven so-called A+H applications which relate to companies that already have shares listed in mainland China, or stocks A, and want to add Hong Kong equities or shares H. A total of 10 such applications are currently being processed.
This week, Contemporary Amperex Technology, also known as CATL, submitted its listing application draft to the Hong Kong exchange. It is expected that this company will raise at least $5 billion. This will be the biggest IPO in Hong Kong for more than four years. The mentioned company is the world’s largest manufacturer of batteries for electric vehicles. The firm is based in Ningde, in East China’s Fujian province. The company expects that the proceeds from the proposed IPO will strengthen its global expansion, which will help strengthen China’s dominant position in the electric vehicle supply chain.
As we have reported earlier, Wall Street Prepares to Private Equity-Fueled IPO Revival.
