Hong Kong’s regulators consider taking some sizzle out of world’s hottest IPO market, cracking down on China’s debut punters

A number of policies under consideration by Hong Kong’s financial regulators may take some of the sizzle and exuberance out of one of the world’s busiest destinations for initial public offerings (IPOs).

The Hong Kong Exchanges and Clearing Limited (HKEX), the bourse operator, is aiming to use a new platform to pick out investors who use different brokerage accounts to apply for the same IPO, when it rolls out its Fast Interface for New Issuance (Fini) system in the second quarter of 2022.

The Securities and Futures Commission (SFC) will go one step further: a public consultation, under way since December, proposes to set up an investor identification system to augment its market surveillance function and detect possible misconduct. The consultation ended on March 4.

Together, the policies may pull the rug from under the retail investors – particularly punters from mainland China – who are making use of the city’s disclosure and identification loopholes to gain unfair advantage in their bids for stock allotments, seen as sure-fire routes to quick profits. At least one IPO – the HK$2.04 billion (US$263 million) offer last month by New Horizon Health – was overbought by 4,130 times, only to have 11,000 multiple applications found, and rejected.