Affected by regulatory environment changes, many companies have recently withdrawnAShare listing applications. According to Frost & Sullivan's observation, are these companies likely to wish to list in Hong Kong or overseas? If so, which industries or types of companies are more likely to switch to Hong Kong? In the Hong Kong white paper released by Frost & Sullivan and Jeli, Frost & Sullivan expects consumer goods, biomedicine, and technology companies specializing in niche fields to be actively preparing for listing in Hong Kong. In the same track or similar sectors/Companies of various types have chosen Hong Kong as their listing destination. Is there a possibility that they may face more competitive pressure in terms of valuation and issuance? Under the continuously low valuation and market sentiment in Hong Kong stocks, what is the outlook for mainland companies listing in Hong Kong?
Frost & SullivanFrost & SullivanDr. Wang Xin, Global Partner and Managing Director of Greater China at Frost & Sullivan, is interviewed below:MergermarketInterview, sharing recent observations by Frost & Sullivan on mainland enterprises going public in Hong Kong.
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Q: Affected by regulatory environment changes, we have noticed that many companies have recently withdrawnAShare listing applications. According to Frost & Sullivan's observations, are these companies likely to wish to list in Hong Kong or overseas? If so, which industries or types of companies are more likely to switch to Hong Kong?
at2023In the year, there were a total of433Enterprises choose to be located inAInitial listings of stocks across different sectors, including41Last year, the listed company chose to withdraw its listing application before the end of last year, and this year2month27On the same day, the number of companies withdrawing their listing applications further increased to68Home, recent corporate withdrawalAThe trend of stock listing applications is indeed worthy of our attention. It is noteworthy that nearly 90% of companies choose to2023year8month27The China Securities Regulatory Commission (CSRC) has issued the 'CSRC's Overall Coordination of the Balance between Primary and Secondary Markets optimizationIPO listingThe listing application was withdrawn after the 'Re-financing Supervision Arrangement', which was made after the CSRC fully considered the current market situation. The arrangement mainly proposes to tighten supervision in stagesIPO listingRhythm promotes dynamic balance at both investment and financing ends. At the same time, regulatory requirements that emphasize supporting the advantageous and restricting the inferior have been put forward. This indicates that changes in the regulatory environment have become a recent focus for many companies.AOne of the main reasons for the withdrawal of a stock's listing application.
2023The year is the first year for China's capital market to implement a comprehensive registration-based system reform, althoughAThe institutional arrangements for the share registration system have been basically finalized, but for those that are to be fully implemented within one year onlyAIn the stock market, there is still much room for improvement. In contrast, the Hong Kong stock market has a more mature mechanism and a longer development history, which will provide better listing opportunities for some enterprises that meet the listing requirements. Especially for companies in consumer goods, biomedicine, and specialized technology fields (including new-generation information technology, advanced materials, new energy and environmental protection, as well as new food and agricultural technologies), they will gain better development opportunities if they meet the Hong Kong listing requirements.
In recent years, it has beenAThe number of consumer companies listed on the stock market is relatively limited, mainly due toAStocks have relatively strict review requirements for relatively traditional mass consumer enterprises and fast-moving consumer goods and catering chain enterprises. In contrast, the Hong Kong stock market holds a more neutral attitude towards consumer industries involving mass 'food, clothing, housing, and transportation'. As of now, several consumer enterprises such as Tea Bai Dao and Xiao Cai Yuan have submitted applications to list on the Hong Kong stock market. It is particularly worth mentioning that Zhenjiu Lidu Group, as a representative of the liquor industry,2023year4month27It was successfully listed on the stock market, becoming the largestIPO listingissuing company, also recently7The only successful listed company in the liquor industry over the past year.
Meanwhile, in the withdrawalAStock listing application68Among enterprises, about one-third come from software and information technology services, as well as the manufacturing of computers, communications, and other electronic equipment, and nearly10My family comes from the pharmaceutical manufacturing industry. Enterprises in these industries are also one of the types that the Hong Kong stock market has been actively welcoming in recent years.2018In [year], the Hong Kong Exchanges and Clearing Limited specifically added18AChapter, allowing eligible biotech companies without revenue to list on the Hong Kong stock marketIPO listingListed financing. To date, there have been60Home biotech companies through18ALog in to the Hong Kong Stock Exchange, with a cumulative fundraising amount exceeding one hundred billion. Subsequently, the Hong Kong Stock Exchange2023Released again this year18CZhang aims to provide more opportunities for special professional technology companies with significant development potential to enter the Hong Kong capital market. Therefore, we believe that enterprises from consumer goods, biomedicine, and specialized technology fields that meet the listing requirements for Hong Kong stocks will find it easier to transition to the Hong Kong market.
Q: We see that in the Hong Kong white paper released by Frost & Sullivan and Jely, Frost & Sullivan expects consumer goods, biomedicine, and technology-specific companies to be actively preparing for listing in Hong Kong. Companies in the same sector or similar fields/Are companies of this type choosing Hong Kong as their listing destination, potentially facing more competitive pressure in terms of valuation and issuance?
Against the backdrop of companies in fields such as consumer goods, biomedicine, and specialized technology actively preparing to go public in Hong Kong, if companies in the same sector or similar fields choose Hong Kong as their listing destination, they are likely to face more valuation and issuance pressure. However, this situation is precisely the manifestation of Hong Kong stocks as a mature international capital market. Under the current fundraising environment, investors usually conduct comprehensive comparisons and evaluations of a company's financial condition, business prospects, and growth potential. This means that companies need to continuously provide more attractive business models, innovative products or services during operations to enhance their competitiveness. Moreover, during the stock issuance roadshow process, they should more actively showcase differentiated investment stories to potential investors, demonstrating their own advantages and competitiveness to win investor recognition and financial support. This competitive pressure is actually a manifestation of the healthy development of the capital market, driving companies to continuously improve their strength and promote the progress of the entire industry.
Q: Under the continuously depressed valuation and market sentiment in Hong Kong stocks, what is the outlook for mainland companies going public in Hong Kong?
Despite being affected by overseas capital markets and macroeconomic environments, the Hong Kong stock market has recently faced challenges including low valuations and low liquidity. However, we remain optimistic that mainland enterprises still have a positive outlook and potential for listing in Hong Kong. As one of the global financial centers, Hong Kong's stock market has always had strong resilience and attractiveness. Despite recent market fluctuations, the Hong Kong stock market still has a mature legal system, sound regulatory mechanisms, and an open capital market, providing a good listing platform for mainland enterprises. At the same time, as the economy gradually recovers and investor confidence rebounds, the prospects of the Hong Kong stock market will gradually become clearer. Investors are optimistic about the long-term development prospects of mainland enterprises, which will provide more sources of funding and support for mainland enterprises listing in Hong Kong.
* This interview was published in Mergermarket The reporter is Jin Yanbo, and the original title is: Moving on: China's IPO hopefuls shift to Hong Kong to avoid A-share delays
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