White CollarChina’s loss is Hong Kong’s gain, as CSRC drags its heels on IPO reform
Mainland companies are likely to continue eyeing Hong Kong as a choice listing destination
The decision last week by mainland Chinese regulators not to change the system whereby companies list on the stock market is good news for Hong Kong and its efforts to attract quality mainland companies.
The China Securities Regulatory Commission on Friday announced there would be no immediate change of its Shenzhen based ChiNext listing process. The announcement came a day after speculation that the mainland would start a new IPO registration system from March 1. Those rumours helped to drag the Shanghai Composite Index 6.4 per cent lower on Thursday as investors fretted the new system would unleash a pipeline of new listings and affect the valuation of the A-share market.
The CSRC statement said although the new IPO registration system has been approved by the State Council in November, it would need “a long time” to carry out a “careful study of the details of the system”.
This means the new the IPO registration system won’t come to fruition any time soon. In other words, the current system in which CSRC approves and control the pace and size of all IPOs will remain intact.
Why does this matter to Hong Kong?
Whenever the CSRC slows down or suspends the listing process, mainland companies inevitably begin looking over the border to Hong Kong.