New | Speeding up China IPO approvals to dilute Hong Kong’s market share of offerings in 2016
Hong Kong plans to tighten its listing regime
The push from the Beijing to install a “registration-based” initial public offering (IPO) system will add fuel to mainland China’s primary securities market in 2016 and put pressure on Hong Kong’s share of the IPO market, analysts said.
The new guidance issued by Hong Kong Exchanges and Clearing (HKEx) on December 21 to ban cash companies from listing will discourage mainland companies from seeking back-door listings in Hong Kong.
China’s top legislation body, the Standing Committee of the National People’s Congress, endorsed a plan on December 27 to start a reform which hands over IPO vetting duties to stock exchanges, and minimise administrative intervention in the process.
The new registration-based IPO system will be in place in two years, but the first changes are expected to kick off from March, analysts said.
Beijing also gave the go-ahead last month to the Shanghai Stock Exchange to create a new board, called the strategic emerging industries board, to bolster new listings of innovative companies, while existing laws and regulations would be fine-tuned to encourage the relisting of overseas-traded Chinese technology firms on the A-share market.
Ringo Choi, the Asia-Pacific IPO leader of Ernst & Young, said implementation of a registration-based IPO format will comprehensively impact the A-share market.