China has cleared the fewest Hong Kong listing applications in eight months, a potential sign such deals may slow down after local companies went on a fundraising spree in the city all year.
Only three firms received the China Securities Regulatory Commission’s nod to proceed with their fundraising plans in Hong Kong, according to figures compiled by Bloomberg. That’s the lowest monthly tally since November and a fraction of the 16 companies that got greenlit in June.
There is still a long queue of companies seeking to do so, with more than 50 firms submitting their paperwork to the Chinese regulator in the first three weeks of July. More than 200 firms are waiting in line, according to the CSRC’s website.
Though the Chinese securities watchdog hasn’t said why the figures are slowing, state media reported on Thursday that mainland authorities are considering doubling the minimum valuation requirements for onshore-traded firms to list in Hong Kong to 20 billion yuan . Still, most firms waiting currently meet this criteria, the Securities Times said, citing unidentified officials.
The CSRC didn’t immediately respond to faxed request for comment.
Any prolonged slowdown in the review process would be felt in Hong Kong given that mainland-based firms have been the driving force behind the city’s sizzling market for listings — Bloomberg Intelligence forecasts overall proceeds will double to more than $22 billion this year.
The slowdown in clearing applications also comes amid a recent increase of listings that have flopped. Six of the worst-performing issuances this year began trading in June or July, with Cloudbreak Pharma Inc., down about 45% since its listing this month, being this year’s biggest laggard.
While the CSRC doesn’t officially approve overseas listings, it reserves the right to block them, effectively making it mandatory for Chinese companies to seek the regulator’s review before proceeding with such deals.
Proceeds from first-time share sales in Hong Kong exceeded $2.3 billion in July, according to data compiled by Bloomberg. While that’s quadruple the figure from a year earlier, it’s the lowest tally in three months, according to the data.
This article was generated from an automated news agency feed without modifications to text.
