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HKEX

Several enquiries but no applications on Day 1 of Hong Kong’s new listing rules because of Labour Day break

HKEX now allows technology companies with dual-class shareholding structures and biotechnology companies with no revenue to list in city

PUBLISHED : Monday, 30 April, 2018, 9:13pm
UPDATED : Monday, 30 April, 2018, 9:15pm

Hong Kong Exchanges and Clearing, the operator of Asia’s third-largest bourse, said numerous companies keen to raise capital under its new listing rules had made inquiries, without any submitting formal applications on Monday, Day 1 of its new listing regime, because they did not want the news of their bids to be lost in a holiday-shortened week.

“We have had a number of pre-IPO enquiries relating to the new listing regime,” said an HKEX spokeswoman. “We expect potential issuers and their consultants will file formal applications in due course. The listing regime is a standing facility and potential issuers don’t need to rush to file applications on the first day.”

Xiaomi, which is looking for an initial public offer that values its business at US$100 billion, is likely to submit its IPO this week after the Labour Day holiday on Tuesday, according to several bankers familiar with the plans.

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Joseph Tong Tang, chairman of Morton Securities, said that since Tuesday was a public holiday, it might have led to no applications on Monday.

“Companies such as Xiaomi may like to apply for a listing this week, but not the first day of the listing regime. There is market speculation that a number of biotechnology companies are planning to list too,” said Tong.

Following a reform announced last Tuesday, after many rounds of consultations held over four years, the HKEX now allows technology companies with dual-class shareholding structures and biotechnology companies with no revenue to list in Hong Kong.

“There are still a lot of challenges to implementing this reform. Obviously, we are facing a lot of competition from other markets for listings by technology companies,” Laura Cha Shih May-lung, the newly elected chairwoman of HKEX, said on Monday.

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

Besides the United States, where many big mainland China technology companies are listed, Singapore is also changing its listing rules to attract flotations by technology companies with dual-class shareholding structures. China has also said it will allow big technology companies to list and issue China depository receipts in Shanghai and Shenzhen.

“China depository receipts will definitely pose a threat to Hong Kong. We will not prevent other markets from developing their own products to attract technology companies to list. What we can do is to do our best to compete for these companies to list here. The HKEX will have more promotional activities in the coming months,” said Cha.

She said she will visit Beijing in May to meet officials, including those at the China Securities Regulatory Commission.

 “We will work out how Hong Kong and China can work together to meet the fundraising needs of technology companies. This will include our listing reforms and Beijing’s China depository receipts scheme. I believe Hong Kong and China can work together to achieve a win-win situations for both markets,” said Cha.

Should dual-class shareholding firms be allowed into the Hang Seng Index?

Cha last Thursday became the first woman to chair the HKEX in the 127-year history of the local stock market. She is a veteran regulator who has previously worked at Hong Kong’s Securities and Futures Commission; in the 1990s, she was instrumental in bringing H shares to list in Hong Kong.

We have had a number of pre-IPO enquiries relating to the new listing regime
HKEX spokeswoman

“The current listing reform is more challenging than the H-shares listing reform 25 years ago. Back then, there was not much debate about bringing H shares to list here, even though we did not have much experience of bringing state-owned companies to list here. The current reform has seen a lot of debate about dual-class shareholding companies. Biotechnology companies without revenue are also very risky. We need to carry out more investor education in these areas,” said Cha.

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