Knowledge is power. That is especially true when it comes to investing in initial public offerings. On July 8 in the SCMP, columnist Jake van der Kamp argued that retail investors seem to be getting too little of it - or rather that information on IPO issuers is being made available to the public too late in the process ('SFC appears to be in la-la land over listing documents').
The public does seem to be getting the short end of the stick here. While institutional investors get the benefit of pre-deal research reports as early as four weeks before an IPO is priced, and also a preliminary offering circular some two weeks later, the public only has to make do with a thick, 'final' document that is published at the start of the retail offer (an offer that lasts for only a few days, at the very end of marketing).
Bankers argue it can only be thus. Retail investors do not provide feedback as institutions do, to enable the setting of a price range. They also say that professional investors are mature enough to make their own analysis and to understand that any information shown to them at an early stage is subject to tweaking.
The public, on the other hand, can only rely on one, final version of the document.
It's pretty obvious that very few individual investors in Hong Kong bother treading through such disclosure tomes, which can represent anywhere from a few hundred to more than 1,000 pages.
Other jurisdictions take a different view. In Singapore and Malaysia, for example, a draft prospectus is posted, after the publication of institutional research reports, on the website of the securities regulator.