BACK-DOOR listings by mainland enterprises on the local stock market will be only a short-lived trend in 1993 despite their current popularity, says Peregrine Investment Holdings managing director Francis Leung Pak-to.
He said a large number of mainland firms were known to have approached merchant banks seeking listed vehicles in Hongkong.
Mr Leung said back-door listings would become much less cost-effective given the rising demand and increasing premiums to buy suitable shell companies.
''Current prices for a shell have risen to as high as $50 million, which would make a direct listing through a Hongkong-incorporated vehicle more justified,'' he said.
He agreed that back-door listings would bring a wider disparity in the quality of the new issues but he also believed that local market practitioners would apply enough self-discipline to ensure quality offerings.
''The methods of flotation should not determine whether a new issue is good or bad. The stock market itself should decide,'' he said.
Besides back-door listings, the local stock market is also expected to see a few substantial direct listings by mainland industrial conglomerates.