Editorial | Hong Kong regulators are right to scrutinise IPO applications
To protect the city’s long-term financial health, investment banks must ensure that only quality applicants become publicly listed
The strong IPO resurgence sees 440 companies currently seeking listing. In a red-hot market, some companies may try to rush the process, and their listing sponsors are sometimes happy to oblige. Investment banks, of course, want to close the deal quickly and move on to the next one, but they have a fiduciary duty to maintain professional standards.
The 13 major investment banks have been instructed to review their work procedures and submit detailed improvement plans within three months. Ideally, the regulator says, each staff member should not handle more than six deals at the same time.
The firms in question have not been named, but collectively they handled 433 IPO applications in recent years, accounting for about 70 per cent of new listings in Hong Kong. The SFC will assess whether tighter licensing requirements are needed in the future.
Almost 100 companies filed for stock offerings in January, more than triple the same period last year. Morgan Stanley anticipated that both the value and number of IPOs this year will exceed those of 2025. These will include a slew of artificial intelligence and robotics companies, such as humanoid and traditional industrial robot makers, as well as firms in industrial automation and in new energy.