WITH THE massive selloffs in Hong Kong these past few weeks, is anyone surprised that a top official with the bourse has said that “troubled” PRC firms have "no chance of listing” in the Special Administrative Region’s capital market?
In a Chinese language piece in Sinafinance, Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing Ltd – the oversight body of Hong Kong’s bourse – said that problematic PRC-based firms looking to go public best look elsewhere.
“All or most of the troubled mainland firms will not have the opportunity to list here. In fact, the exchange will not even consider their IPO applications,” Mr. Li said.
He said that in some respects, Hong Kong was no New York.
“We have seen more than a small sampling of PRC-based firms listed on either NYSE or Nasdaq embroiled in more than a fair share of problems. I am certain that they would not make the grade on the HKSE as they thought they could find an easier audience overseas. I can assert to you that most if not all of these firms facing scrutiny in New York would have never gotten very far in the listing application process here in the first place.”
Mr. Li went on to say that if these firms in question had initially eyed Hong Kong as a listing venue candidate, the bourse watchdog would have quickly ruled many of them out based on their cumulative earnings statements and management performance.
“They wouldn’t have made it very far at all here,” he said.
Mr. Li added that the US listing requirements and the threshold level performance levels for IPO consideration in Hong Kong were quite different.
“The US capital markets are very particular about transparency. If a listing candidate is very up front and open about its recent performance, and has the auditing credentials to give weight to their claims, then generally speaking they are allowed past the starting gate.
“But here in Hong Kong, we not only insist on a similar degree of transparency and veracity, but also mandate a requisite level of performance-based achievements and benchmarks to seriously consider allowing new firms to list here. In short, we are much more particular, exacting and demanding and clearly spell out what we require from listco candidates.”
Speaking on a different aspect of capital market regulation, Mr. Li said that the proposed second-stage extension of trading hours had no current timetable.
Earlier this year, open trading in Hong Kong was altered to keep pace with the Shenzhen and Shanghai stock exchanges, and allowed the opening bell to ring at 9:30 am each day rather than 10:00 am.
Outside analysts believe the latest status report comment by Mr. Li suggests that the exchange is no longer considering expanding the current trading session timeframe.
Mr. Li added that the proposal was meant to allow the HKSE to be more in synch, time-wise, with other neighboring markets, and was never intended as a scheme to increase turnover.
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