Hong Kong's bourse sees Covid firms prolonging boom in IPOs

[HONG KONG] Hong Kong's boom in initial public offerings (IPO) is set to be prolonged as companies given a boost by the pandemic outbreak follow China's technology giants in selling shares, the bourse's head of listings said.

Companies from the technology and biotechnology sectors could continue to fill the IPO pipeline in the near future as Covid-19 has boosted investments in research and development, Hong Kong Exchanges & Clearing's (HKEX) head of listing Bonnie Chan said in an interview on Friday.

"We thought 2020 would be a disappointment, but it has turned out to be a busy year," Ms Chan, 50, said. "I believe the IPO rush will continue." Hong Kong this year has seen a rush of listings from Chinese companies including JD.com and Netease, which are selling shares in the city to supplement New York listings amid growing tension between the US and China. It's now soon set to welcome Jack Ma's fintech giant Ant Group, which is said to plan a US$35 billion dual listing in Hong Kong and Shanghai.

Listings in Hong Kong have jumped 33 per cent this year to HK$220 billion (S$38.39 billion). In turn, the exchange's shares have surged 47 per cent so far in 2020.

The bourse anticipates that listings of companies in the retail and consumer industries will also return once the pandemic subsides, said Ms Chan, who leads a team of more than 260 people to approve listings.

Ant, China's biggest payments company, is waiting for a hearing with the Hong Kong stock exchange on approval for its listing, which was expected to have happened last week. It now faces added uncertainty stemming from a debate in Washington over restrictions on the payments behemoth.

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Ms Chan declined to comment on the Ant application and the process.

The bourse makes sure that applicants disclose all material information in a timely manner, she said, noting that it also has a group that monitors news and related issues that may cause the market and the exchange to react.

"The listing rules are clear and transparent," she said.

Ms Chan is also at the centre of speculation over who will take over after chief executive officer Charles Li, who is leaving the company on Jan 1. She rejoined the bourse in January this year after serving as a partner at law firm Davis Polk & Wardwell. Earlier in her career she led HKEX's IPO Transactions Department at the Listing Department.

"At the moment my focus is on the Listing Department, where I am still new and fresh to the role" said Ms Chan.

The bourse will start making the IPO process paperless starting this quarter, which is expected to save 11,000 paper forms in the first year. Ms Chan's department is also using artificial intelligence to review annual reports for compliance.

"It saves 99 per cent of our colleagues' time and effort," said Ms Chan.

On other outstanding issues of shortening the one-week gap between when a IPO is priced and when it's listed and to allow listings of dual class companies with a corporate backer, the bourse expects to get feedback toward the end of the year and then make a decision, she said.

BLOOMBERG