The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Fudging Hong Kong's IPO numbers

The Special Administrative Region's regulator has botched its attempt to clean up the thorny issue of pre-deal research.

Hong Kong's chief markets regulator, the Securities and Futures Commission (SFC), has been a busy place of late. Currently on the reform agenda are 21 separate proposals designed to streamline and improve the IPO process in Hong Kong. These measures have assumed a greater international relevance since Hong Kong has cornered the market for China listings after America cooked its own China goose with Sarbanes-Oxley.

The SFC is currently in consultation mode and wants feedback on the measures, most of which constitute laudable improvements to the current system, a cumbersome and over-regulated documentary morass. If you doubt it, just ask one of Hong Kong's bleary-eyed bankers.

On the thorny matter of pre-deal research, however, the SFC has demonstrated considerably less backbone. Indeed one of its proposals looks like a messy fudge that threatens to make the current IPO procedure more cumbersome not less so.

Many serious markets, the US and Japan among them have already banned pre-IPO research issued by sponsors and deal-related investment banks on their clients as inherently flawed and impossibly biased. Hong Kong, like much of Europe has continued to accept this fiction as useful to an IPO. Anyone who has worked on IPO transactions will tell you that the vast majority of this research is little more than data regurgitated and reformatted from the company prospectus, together with some financial forecasts and always stamped with a cheerily optimistic recommendation.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree