Hong Kong to enhance IPO rules to give applicants ‘certainty’ in timing, attract listings

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Certainty in timing would go a long way towards enhancing Hong Kong’s attractiveness as a fundraising hub, proponents said.

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An electronic billboard displaying the Hang Seng Index and stock prices outside the Exchange Square in Central on August 22, 2023. Photo: Yik Yeung-man

Enoch Yiu

Published: 5:36pm, 16 Oct 2024Updated: 5:41pm, 16 Oct 2024

Hong Kong will enhance the rules on the local stock exchange to give companies greater certainty in the timing of their initial public offerings (IPOs), as the government pulls out all the stops to attract listings and regain its former crown as the world’s favourite hub for raising capital.

Hong Kong Exchanges and Clearing Limited (HKEX) and the Securities and Futures Commission (SFC) will improve their approvals process to give IPO applicants that sense of certainty, Chief Executive John Lee Ka-chiu said in his policy address on Wednesday.

Hong Kong’s current rules for vetting IPOs based on their merits take longer than the disclosure-based processes in other global markets, said Louis Wong, executive director of Phillip Capital Management (Hong Kong).

“The current approach is aimed at insulating investors from excessive risks, but it leads to uncertainties,” he said. “The applicants do not know if they can get approval, and the uncertainty adds delays and increases costs.”

Hong Kong’s Chief Executive John Lee Ka-chiu delivered his third Policy Address at the Legco Chamber of the city’s legislature in Admiralty on October 16, 2024. Photo: Sam Tsang.

Certainty in timing would go a long way towards enhancing Hong Kong’s attractiveness as a fundraising hub. More companies from mainland China are likely to launch mega listings soon in Hong Kong, while roadshows to the Middle East and Southeast Asia will burnish the city’s appeal, Lee said.

“The initiatives presented today will help promote market efficiency, boost transparency, diversify our product ecosystem, and elevate the attractiveness of our markets to our global investor base,” HKEX chairman Carlson Tong Ka-shing said in a statement after Lee’s address. An HKEX spokesman said the details of the enhanced listing regulations will be announced in due course.