The Business Times

Hong Kong exchange considers lowering threshold for hard-tech listings

Published Wed, Sep 14, 2022 · 07:08 PM

HONG Kong’s stock exchange (HKEX) will publish new draft rules within the next few weeks to make it easier for hard-tech companies to sell shares in the city, according to 3 sources with direct knowledge of the matter.

Hong Kong Exchanges and Clearing, operator of the city’s stock exchange, is informally consulting with the industry to reduce revenue and profit requirements for companies in sectors such as chips and artificial intelligence, they said.

The sources could not be named as the information was not yet public.

The HKEX is “studying how best to create a listing chapter to cater to the funding needs of large-scale advanced technology companies that are at an early stage of product commercialisation,” a spokesperson said in an email statement.

The spokesperson did not comment on whether the exchange has informally consulted the industry about the proposed changes and the timeline of any rule revision.

Hong Kong Finance Secretary Paul Chan flagged in his February budget speech that the city was keen to attract more tech companies to the local bourse.

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A consultation with a set of proposed changes is due to be published by the end of September and the rules are likely to come into effect early next year, 2 of the sources said.

The move is designed to retain the attractiveness of Hong Kong’s capital markets amid tech stock routs and continued geopolitical tensions that have choked IPO pipelines. Hong Kong IPO volumes are down almost 90 per cent so far in 2022, according to Refinitiv data.

Bloomberg earlier on Wednesday (Sep 14) reported that under the new listing rules the revenue requirement for commercialised tech firms would be HK$200 million to HK$300 million (S$35.8 million - S$53.7 million), down from the exchange’s current requirement of HK$500 million.

Hong Kong lawyers and investment bankers have argued during the consultation phase that the revenue requirements are still too high, 2 of the sources said.

The city’s Securities and Futures Commission (SFC) did not immediately respond to Reuters request for comment. REUTERS

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