Hong Kong’s stock exchange is stepping up its game to attract more listings away from the US and mainland China, writes Luo Weiteng
With the introduction of its biggest listing reform for 25 years in April this year, local bourse operator Hong Kong Exchanges & Clearing Ltd (HKEx) sends a strong message to promising companies the world over: our doors are wide open for you.
The listing reform opens the gateway to companies from emerging and innovative sectors, with weighted voting right (WVR) structures and biotechnology companies without any prior record of revenue or profit to be listed on the local bourse. It also provides a concessionary secondary listing route for Greater China and international innovative companies listed on qualifying exchanges overseas, says Ronny Chow, a partner at Deacons in Hong Kong.
“Alongside this major listing reform, the HKEx also allows Chinese companies currently listed on the National Equities Exchange & Quotation [NEEQ, or New Third Board] to list in Hong Kong without first delisting from NEEQ,” says Chow.
The operator of Asia’s third-largest stock exchange by market capitalization spent years of effort to eventually overturn a ban on companies that have shares with different voting rights from going public in Hong Kong, an issue that caused the city to lose out on Alibaba’s US$25 billion deal, the world’s largest IPO that listed on Wall Street back in 2014.
WVR, also known as dual-class shares, are allowed in many jurisdictions, including the US, Canada, Brazil, France, Italy and Switzerland.
“The shareholding structures are particularly attractive to fast-growing, entrepreneur-led companies, as they give the founders good prospects of continuing control, leaving them free to focus on developing the business for the long term, without the distraction that battles with hostile bidders or activist shareholders may bring,” says Greg Knowles, a partner at Maples and Calder in Hong Kong.