Regional diversification top of HK's focus(3)

Reforms needed

Financial services industry stakeholders say that Hong Kong needs to continue reforming its listing regime to make the bourse more appealing to overseas issuers.

"HKEX has implemented enhancement reforms since February last year, providing greater flexibility to dual-primary listed issuers and formulating core shareholder protection standards applicable to companies from different places," says John Chan Kei-yin, executive director of the institutional division at Tiger Brokers HK — a fintech company listed on the Nasdaq.

"Foreign companies primarily listed in Hong Kong have been included in the eligible scope of securities under stock connect programs from March that increases liquidity and valuation of overseas issuers' securities in Hong Kong's equity market," he says.

Benson Wong agrees that HKEX has to make GEM reforms. "Regulators should relax some of the existing listing requirements, such as minimum market capitalization, the public float value of securities, cash flow and track record period, and simplify the transfer from GEM to the main board by replacing the existing IPO prospectus requirement with a standard transfer application form."

"HKEX could also conduct a comprehensive review of the main board listing requirements to ensure they are conducive to ASEAN companies' needs. This may involve revisiting financial thresholds, corporate governance requirements, and compliance obligations to make ASEAN small and medium-sized firms more suitable for listing in Hong Kong," suggests Eddie Wong.

SEHK published GEM listing reform proposals last month, seeking market feedback over a six-week consultation period ending on Nov 6. The proposals include a new streamlined transfer mechanism for eligible GEM companies to transfer to the main board; an alternative eligibility test for high-growth companies heavily engaged in research and development; and the removal of mandatory quarterly reporting requirements.

The bourse operator implemented the listing framework in March, enabling specialist technology companies to pursue listings in the SAR easier by lowering the market capitalization threshold and sophisticated shareholder criteria.

Since 2018, HKEX has made several major changes to its listing regime, including allowing listings of innovative companies with weighted voting rights structures; listings of pre-revenue biotechnology issuers that do not meet the main board financial eligibility requirements; and establishing a new concessionary secondary listing route for mainland and international companies.