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Hong Kong Stock Exchange Aims to Accelerate IPO Application Review Process

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Hong Kong has introduced a fast-track procedure for IPO applications to attract new companies, reducing the review time from 173 to 100 days. In response to the Chinese economy’s challenges and recent government stimulus measures, the IPO market is showing signs of recovery, with a notable increase in capital raised. Eligible companies must meet specific criteria, including a HK$10 billion market cap. This initiative aims to enhance Hong Kong’s global competitiveness in capital markets while maintaining regulatory standards.

(BFM Bourse) – In an effort to attract new businesses to its stock market, Hong Kong has rolled out a fast-track process for reviewing IPO applications this week.

The state of the Chinese economy and its stock markets is currently a focal point for financial markets. Consequently, Beijing has been implementing a series of stimulus measures aimed at strengthening the country’s economy to reach a 5% growth target for 2024.

Recently, the central bank of China revealed plans that could inject as much as 800 billion yuan (approximately 103 billion euros) into its equity markets.

A Thriving Summer

This stimulus effort may also breathe new life into the recovering IPO market. In Hong Kong, there are signs of rejuvenation as the stock market experienced its most successful week in two years, raising $1.3 billion (€1.19 billion) in IPOs, according to Reuters, citing Dealogic data.

Bloomberg Intelligence reported that capital raised through IPOs surged more than sixfold to HK$42.3 billion ($5 billion) in the third quarter, while average trading volumes for Hong Kong shares rose by 21% during the same period.

New measures implemented by Hong Kong’s market officials are anticipated to boost the influx of new listings. The Hong Kong Stock Exchange has committed to reducing the IPO review process from the current median of 173 working days to just 100 days, as reported by Bloomberg, ensuring a set timeline for IPO applicants.

Accelerated Review Process

Companies already listed on mainland exchanges in Shanghai and Shenzhen can take advantage of this expedited procedure if they meet specific criteria. Eligible companies must have a market capitalization of at least HK$10 billion (€1.2 billion) and must have adhered to all relevant laws and regulations for the two full financial years prior to their new listing application.

In such cases, the stock exchange is set to process the listing application within a single cycle lasting under 30 business days, according to the official announcement.

This expedited timeline is expected to provide greater clarity and certainty in the re-listing application process, assisting potential applicants and their advisors in developing their listing strategies, stated Katherine Ng, head of listing at the Hong Kong Stock Exchange.

Michael Duignan, Executive Director of the Securities and Futures Commission, expressed full support for the initiative, stating it aligns with the strategic priority to enhance Hong Kong’s competitiveness and appeal within global capital markets.

However, it’s important to note that this expedited timeline will not be applicable to companies with applications that raise ‘significant regulatory concerns’ or issues regarding the ‘quality of listing document preparation,’ according to the stock exchange.

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