Hong Kong exchange counts on confidential application process to attract secondary listings by publicly traded companies

The confidential process will be kept under wraps to shield applicants’ existing shares from volatility and speculation, according to the exchange’s listing rules

The duration of the confidentiality works on a case-by-case basis

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Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing Limited (HKEX), unveiling the bourse operator’s strategic plan. Photo: K.Y. Cheng

Published: 7:29pm, 28 May 2019Updated: 11:00pm, 28 May 2019

Hong Kong’s stock exchange is counting on a confidential application process for companies that are already listed in New York or London to raise funds on its bourse, part of the process to sharpen the city’s edge in the race to be the global fundraising hub, market participants said.

Unlike initial public offering (IPOs) applications that are publicly disclosed, the confidential process will be kept under wraps to shield applicants’ existing shares from volatility and speculation, according to the exchange’s listing rules. The duration of the confidentiality works on a case-by-case basis depending on needs, according to financial officials familiar with the matter.

The process, part of last year’s listing reforms by the Hong Kong Exchanges and Clearing Limited (HKEX) and the local securities regulator, is among the incentives for attracting global listed companies to consider Hong Kong as an additional source of funds.

“Confidential filings are an important aspect, because these companies are already publicly listed, and they don’t want any potentially market-sensitive information to be in the public domain,” said Stephen Chan Yiu-kwong, a partner at the international law firm Dechert in Hong Kong.

Hong Kong was the world’s number one destination for IPOs in six of the last 10 years, surpassing New York and Shanghai in the amount of funds raised locally. The competition is becoming particularly intense, as the mood in global capital markets soured after the US-China trade war spilled over into a stand-off over technology.