SFC to ease Hong Kong listing conditions for firms linked to Belt and Road

Move comes after city’s stock exchange loses out to New York, Shanghai and Shenzhen in first quarter

PUBLISHED : Tuesday, 11 April, 2017, 8:45pm
UPDATED : Tuesday, 11 April, 2017, 10:42pm

Hong Kong’s Securities and Futures Commission says it is willing to be more flexible in approving “One Belt, One Road” initiative-linked companies to list on the main board, even if they do not meet certain criteria.

The city’s stock exchange is fighting hard to become a fund-raising centre for projects planned within the Beijing-led initiative, that are expected to require some US$8 trillion until 2020, the regulator said on on Tuesday.

A number of infrastructure companies have already expressed their interest with the commission to list in Hong Kong, according a source familiar with the situation, which has prompted the SFC to adopt a more liberal stance in the case of companies that could become involved in the hundreds of projects expected.

The same flexible approach is also likely to be used for some energy companies, it said, as Hong Kong fights it out with London and New York to host the Saudi Aramco initial public offering (IPO), which is expected to become the largest ever next year, valuing the oil giant at US$2 trillion.

Brokers believe the Hong Kong commission may also start to adopt a more flexible approach for technology firms to list in future too.

The SFC has stepped up its efforts at attracting new listings after Hong Kong lost out to New York, Shanghai and Shenzhen’s ChiNext in the first quarter of this year on the value of funds raised via IPO.

The city has ranked top IPO market worldwide for the past two years but a lack of blockbuster flotations in the first quarter, and particularly a dearth of technology firms seeking to list here, has pushed the city into fourth place worldwide.

Normally, for instance, the SFC requires main board constituents to have a HK$50 million profit before listing. But that’s unlikely to be imposed, the commission said, for any company to list in Hong Kong, provided it is located in a country tied to the Belt and Road, and as long as the risk levels are considered acceptable.

The Belt and Road initiative was launched by Beijing in 2013 to promote the building of railways, roads, power plants and other infrastructure projects in 60 countries from Asia to Europe to promote trade and economic growth.

“Hong Kong’s international profile and reputation as a venue for capital raising puts it in an excellent position to take advantage of the opportunities presented by the Belt and Road Initiative,” said Ashley Alder, the SFC’s chief executive.

Hong Kong’s international profile and reputation as a venue for capital raising puts it in an excellent position to take advantage of the opportunities presented by the Belt and Road Initiative
Ashley Alder, SFC chief executive

“The SFC has a pivotal role to play in helping establish investor confidence in large-scale Belt and Road projects and we look forward to working with the industry to make them a success.”

While Hong Kong Exchanges and Clearing is the front line regulator to approve new listings, the SFC is the ultimate regulator on listing matters.

The SFC added in a statement that the flexible approach is based on the provisions of the Securities and Futures (Stock Market Listing) Rules, which gives the SFC powers to regulate the Hong Kong market.

“The SFC uses these provisions to protect the investing public and maintain fair and orderly markets, and also to facilitate market development initiatives such as the listing of infrastructure project companies,” it said.

“The objective is to maintain the overall quality of the market whilst providing a pathway for infrastructure project companies to achieve a listing.”