When it comes to listings, Hong Kong’s rivalry is with Singapore, not Shanghai or Shenzhen: SFC

Securities and Futures Commission chairman Carlson Tong plays down the competition posed by Chinese stock exchanges despite their moves to attract new economy companies to list

PUBLISHED : Thursday, 15 March, 2018, 7:18am
UPDATED : Thursday, 15 March, 2018, 8:32am

Singapore is Hong Kong’s rival, and not Shanghai or Shenzhen, when it comes to attracting “unicorns”, according to Securities and Futures Commission chairman Carlson Tong Ka-shing.

Several Asian stock exchanges are vying with each other to change listing rules in a bid to attract new economy companies and dual-class shareholding structure firms to list.

“The stock exchanges of Shanghai and Shenzhen have never been competitors of Hong Kong as we always cooperate with each other. Tong said on the sidelines of a regulatory forum on Wednesday. “Rather, Singapore is a competitor of Hong Kong,” adding that if dual-class shareholding companies were to list in Hong Kong and in the mainland, it would be a win-win situation for both.

Singapore Exchange brings dual-class IPO battle to Hong Kong, offers better listing terms

Bourse operator Hong Kong Exchanges and Clearing (HKEX) last month said it would bring forward its listing reform by several months, with its one-month long consultation due to end on March 23. Thereafter it plans to change the rules which will take effect in late April and start accepting listing applications of dual-class shares companies and biotech giant without revenue.

Shanghai Stock Exchange officials said in a statement over the weekend that they had prepared a package of services aimed squarely at tempting unicorns – unlisted tech firms valued at more than US$1 billion – and had already visited a clutch of high-quality companies, to pitch for their listing on the bourse.

Liu Shiyu, chairman of China Securities Regulatory Commission (CSRC), the mainland’s top markets watchdog, confirmed last week that Beijing is rethinking its building of a mechanism to attract domestic technology firms, financed by foreign funds.

Singapore Exchange (SGX) too is also planning to allow dual-class share structure companies to list as early as July.

Chew Sutat, executive vice-president of SGX, said last week that a couple of “multibillion-dollar market cap” companies from Hong Kong were planning to list in Singapore in July and August, including one with a dual-class listing structure.

Beijing’s overture to tech firms triggers a tug of war between mainland and Hong Kong bourses

SFC’s Tong said Hong Kong’s stock market will not be affected by China’s plans to attract new economy companies. 

“Hong Kong cooperates with mainland stock markets but we are very independent,” Tong said.

In 2014, Alibaba Group Holdings, owner of the South China Morning Post, chose to list in New York after Hong Kong’s refusal to allow a dual-class structure. 

Dual-class share structure allows shareholders – most of whom are founding members – to have more voting rights or enjoy more dividends. 

Asian stock exchanges previously opposed such companies to list because it goes against the “one share one vote” principle. But now several exchanges are speeding up their reforms to explicitly allow dual-class shareholding companies to list.

Meanwhile, Julia Leung, deputy chief executive of SFC, said at the same forum that the commission found shortcomings in the works of 31 financial firms that acted as listing sponsors.

“Some listing sponsors did not fulfil their duty with regards to due diligence on the companies they sponsored, falling short of the SFC requirements,” she said, adding the commission will issue a report on the matter soon. 

She also said the commission plans to study some brokers’ demand to use WhatApp to take customer orders.