Leung Fung-Yee, deputy chief executive of Hong Kong Securities Regulatory Commission and executive director of intermediary institutions, said that the environment in the IPO market had changed in the past decade, Zhitong Financial APP learned. Nearly 400 listing applications were received last year, more than double the number in 2012. Although the number of listings has risen, they are all small in scale. She pointed out that a considerable number of smaller offerings completed in recent years had relatively concentrated shareholdings at the time of listing.

She pointed out that in order to enhance the overall liquidity of the market, the SFC was working with the SEHK to study the reasons for the relatively low trading volume. The consensus drawn from the study and through contacts with share holders is that the lack of trading volume and liquidity of some stocks in Hong Kong is related to the problems considered by that part of listed companies and securities.

Percentage of successful new applications dropped to 49%

Ms Leung pointed out that in recent years, many listing applicants, especially those with smaller issuance amounts, lacked convincing reasons for listing. The cost of listing is often out of proportion to the amount of money raised, and they don't actually need new capital. Many of these companies often change hands or receive significant asset injections shortly after initial public offerings. These situations are not only a trend, but also accompanied by a variety of manipulation activities, such as extreme price fluctuations, overpriced acquisitions and highly diluted fund-raising projects.

She pointed out that once serious problems were suspected, SFC would exercise its power to make enquiries on listing applications, and many of the applications were either past the final processing deadline or withdrawn on their own. The percentage of listing applications that have expired, withdrawn or rejected rose from 33 per cent in 2016 to 51 per cent in 2018. At the same time, the percentage of successful new applications fell from 67% to 49%.

Ms Leung also mentioned that a thematic review was being conducted on the bookkeeping and filing process in the stock and bond capital markets, and guidelines would be issued based on the results of the review, as well as the framework of the IPO process. Dialogue with the listing Division of the HKEx (00388).