[Listing Reforms] HKEX's 3 Major Reform Directions - Market Views at a Glance (Continuously Updated)

To enhance Hong Kong’s listing mechanism competitiveness, the Hong Kong Stock Exchange is optimizing the rules for same-class different voting rights (WVR) listings, facilitating overseas listings and return flows, and expanding the confidentiality submission process for listing applications to all companies. An overview of market opinions.

Table of Contents

• Sponsors: Important and Timely Measures
• Accounting Sector: Attractive to Companies Interested in Listing
• Industry Organizations: Moderately Relaxed Thresholds to Help Companies List
• Financial Services Legislators: Attract Overseas Companies to Hong Kong; Advocate for GEM Reform and Enrich SME Financing Channels
• Think Tank China Development Finance Bureau: Reasonable and Appropriate Direction to Help Listed Companies Diversify
• Think Tank United Hong Kong Foundation: Balance “Enhancing Competitiveness” and “Protecting Investors”

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Sponsors: Important and Timely Measures

Morgan Stanley Managing Director and Head of Hong Kong Listing and Corporate Finance, Bai Sijia, posted on social media that the consultation on enhancing Hong Kong’s listing framework competitiveness is an important and timely move for the sustained development of Hong Kong’s capital market.

She stated that the listing system must be continuously improved, maintaining Hong Kong’s long-standing high regulatory standards while balancing flexibility and competitiveness. She believes this consultation is another key step to strengthen Hong Kong’s capital market ecosystem and long-term competitiveness, reflecting the Exchange’s serious listening to market opinions and active response to global capital market trends.

Accounting Sector: Attractive to Companies Interested in Listing

KPMG Capital Markets Services Partner, Golden Choi, welcomes the extension of confidential applications to all companies by the Hong Kong Stock Exchange. Many companies are concerned about whether they can list without disclosing all prospectus content and company information, so confidentiality is attractive to those interested in listing. He also revealed that among the inquiries received, a significant number of companies prefer to submit applications confidentially.

He pointed out that since May last year, the HKEX has allowed special technology and biotech companies to submit confidential applications, and many related clients have used this channel to list.

Regarding the relaxation of WVR listing thresholds, if the market value at listing reaches HKD 40 billion, the voting rights for privileged shares can be increased from a maximum of 1 share/10 votes to 1 share/20 votes. He noted that many companies listed on qualified overseas exchanges are currently ineligible to return due to existing regulations, and these adjustments will help attract more companies to list in Hong Kong.

Industry Organizations: Moderately Relaxed Thresholds to Help Companies List

Huang Mingwei, Secretary General of the Hong Kong Listed Companies Association, supports moderate relaxation of WVR thresholds, allowing more WVR companies to qualify for listing. The rapid growth of tech companies, along with targeted enhancements to the “Innovative Industries” regulations, will help Hong Kong provide more listing channels for various types of enterprises.

He said that although thresholds are relaxed, he believes HKEX and other regulators will maintain proper market oversight, ensuring only worthy and suitable companies go public.

Financial Services Legislators: Attract Overseas Companies to Hong Kong; Advocate for GEM Reform and Enrich SME Financing Channels

Legislative Council Financial Services Member, Li Weihong, stated that the HKEX’s proposals will help attract more overseas companies to list in Hong Kong, including Chinese concept stocks listed elsewhere, Southeast Asian firms, and companies from countries along the Belt and Road, creating a more diverse and attractive market environment.

He believes the proposals effectively lower listing thresholds, breaking down market barriers. He hopes the government, regulators, and the exchange will continue to push for listing reforms, especially for SMEs, by reviewing listing rules, reforming GEM, enriching SME financing channels, and creating more opportunities for SME underwriters, sponsors, and traditional brokerages. He also hopes HKEX will maintain close communication with the industry to enhance Hong Kong’s competitiveness as an international financial center.

Think Tank China Development Finance Bureau: Reasonable and Appropriate Direction to Help Listed Companies Diversify

Hong Kong Financial Development Council CEO, Dong Yiyue, said that this listing reform aligns with the long-term development report on Hong Kong’s capital market released by the government in December last year and recent industry communications. He supports the proposed directions in the consultation document, believing they are reasonable, appropriate, and timely, helping attract more diverse listed companies to Hong Kong.

He pointed out that Hong Kong does not only need “giant” listed companies. To attract European or Southeast Asian firms, their market cap may not be large. Lowering the WVR market cap threshold is very suitable to meet market needs. Additionally, relaxing the second listing threshold will promote the internationalization of the local market, making it easier for investors to invest in domestic and overseas companies via Hong Kong.

However, he noted that successful implementation depends on timing. About ten years ago, in a low-interest environment, some proposals were difficult to implement because companies had less urgency to list. Now, with relatively high interest rates, companies face more financing needs in the public market. The current environment makes these proposals more timely, helping Hong Kong’s capital market meet financing needs across different economic cycles.

For future market reforms, he suggests emphasizing the importance of passive investment, leveraging ETFs to better allocate resources in the capital market. With rising passive investment globally, including index funds, stakeholders could consider launching new indices that include WVR companies, biotech firms, or other companies planning to list in Hong Kong. Attracting more overseas passive funds to focus on Hong Kong stocks will help build a more liquid market.

Think Tank United Hong Kong Foundation: Balance “Enhancing Competitiveness” and “Protecting Investors”

Vice President of United Hong Kong Foundation and Executive Director of the Public Policy Research Institute, Shui Zhiwei, said that overall reforms will help strengthen Hong Kong’s position as an international financial center. However, there must be a balance between “enhancing competitiveness” and “protecting investors.” He calls for strengthening information disclosure, independent director oversight, and corporate governance monitoring. For companies with 1 share/20 votes, clearer and more prominent risk warnings are necessary. If a company deviates from governance norms or exhibits abuse of power, market warnings should be issued first, and in severe cases, consideration should be given to forcibly reducing the proportion of different voting rights.

To ensure smooth implementation of reforms, he recommends that HKEX quickly develop a clear timetable after releasing the consultation summary. He also suggests providing pre-consultation or informal communication channels before new rules take effect, helping companies prepare application documents early and shortening the actual listing approval process after the new rules are implemented.