image

Hong Kong Stock Exchange

Questions remain over new Hong Kong listing rules

    PUBLISHED : Tuesday, 08 January, 2019, 5:01pm
    UPDATED : Tuesday, 08 January, 2019, 5:01pm

    I share your correspondent Frank Lee’s concern regarding the Hong Kong Exchanges and Clearing’s new listing rules that were implemented in 2018 (“Jury still out on new rules for listing in city”, January 5). The message is that, in 2019, the exchange will be focused on opening up our market to a wider range of issuers to become “more competitive”.

    Mainland Chinese companies are now so predominant on our exchange that some fund houses have stopped offering separate Hong Kong equity funds.

    This is part of the natural developments in the region over the last 20 years, and Hong Kong’s integration with the Shanghai and Shenzhen exchanges via the Stock Connect is gaining impetus. However, it must be remembered that China has only relatively short experience in capital markets.

    It seems that the Communist Party has little interest in individual rights, whether human rights or investor interests. In light of recent frictions, it would appear that Hong Kong’s new listing rules for “new economy companies” are strategic, as China would want to avoid its unicorn companies being listed on US exchanges, such as the Nasdaq, where the regulatory scrutiny may be more stringent and where individual investors are more protected by the American legal system, especially through class actions.

    Six months on, what has the stock listing reform given Hong Kong?

    It is hoped that by weakening quality standards in order to facilitate Chinese companies, Hong Kong will not throw the baby out with the bathwater.

    K.Y. Leung, Shouson Hill