TIGHTER CHINESE REGULATORY SCRUTINY IS INCREASING RISKS IN HONG KONG’S IPO MARKET

 

International media outlets report that China’s securities regulator (CSRC) has begun tightening its review and approval standards for certain red chip companies that operate primarily in mainland China but are incorporated offshore and seeking to list in Hong Kong through an IPO.

As a result, there is a growing tendency to steer some red chip companies toward restructuring into mainland registered entities and pursuing listings in Hong Kong in the form of H-shares.

While this shift may support more direct listing structures over the long term, in the near term it is expected to complicate fundraising for companies in the technology and biotechnology sectors, while increasing financing costs, regulatory pressure, and market uncertainty.

/Source: SCMP, Reuters/

UBIM is aligning financing and investment solutions for the capital city’s major projects with actual market conditions, while taking into account changes and regulatory trends in international capital markets.

Red-chip → an offshore incorporated company with core operations in China, often with Chinese state influence

H-share → shares of a mainland China incorporated company listed and traded in Hong Kong