Hong Kong Stock Exchange expedites approval process for IPOs

The Hong Kong Stock Exchange relaxed its secondary listing criteria yesterday in an effort to encourage foreign-listed Chinese companies to list back in Asia.

• The reforms abolish the requirement that companies be “innovative” and have a certain kind of voting structure. It will also lower the market cap threshold for interested companies.
• HKEX released a document earlier in the day showing Sina Weibo, a major social media platform, has passed its approval to list in Hong Kong.

The context: Beijing has proposed new rules for companies listing outside the mainland, subjecting them to heightened scrutiny for data security concerns.

• But it remains to be seen how those rules will play out: SenseTime, China’s biggest artificial intelligence company, said authorities have yet to subject the firm to a cybersecurity review ahead of its Hong Kong IPO.
• As the SEC in the U.S. raises transparency requirements for Chinese companies, China is hoping it can make Hong Kong an attractive alternative.

Also relevant: Gaming giant NetEase, which is dual-listed on the NASDAQ and in Hong Kong, has chosen the latter as the place to go public with music subsidiary Cloud Village. But not without difficulty: The IPO was aborted in August on crackdown concerns, and this time, its valuation is less than half of the $1 billion cited three months ago.