Stock exchange plans big change to boost city's competitiveness in firms' listing

The Hong Kong Stock Exchange－Asia's third-largest bourse by market capitalization－is looking to accept initial public offering applications from new economy companies by the end of this June.

The new economy refers to sectors emerging from the transition from manufacturing-led growth to a high-tech and services-driven economy.

Charles Li Xiaojia, CEO of the bourse's operator Hong Kong Exchanges and Clearing, told the Asia Financial Forum on Tuesday in Hong Kong that a round of consultation on the new listing rules will be launched after the Spring Festival holiday.

"It is expected that we can nail down the listing rules at the beginning of June and accept IPO applications under dual-class shares structures by the end of the month," Li said.

His remarks came after the Hong Kong Stock Exchange proposed what is said to be the biggest change to its listing rules since 1993.

In December last year, the bourse began drafting specific rule changes that would pave the way for the issuance of controversial dual-class shares, after the Securities and Futures Commission softened its stance on the long-entrenched "one share, one vote" principle.

Dual-class shares are also known as weighted voting rights and are allowed on many bourses around the world, including those of the United States, Canada, France and Switzerland. They typically grant a particular group of shareholders greater voting rights than others, and are favored by new economy companies as a way of shielding founders and top executives from short-termism.

Highly-sought-after new economy companies have offered a major boost to the Hong Kong Stock Exchange, a bourse that has long been dominated by enterprises engaged in the traditional financial services and real-estate sectors, which are the twin pillars of the special administrative region's economy.

Hong Kong is raising the stakes in its battle for Chinese mainland blockbuster listings against New York, which stole its much-coveted crown as the world's leading venue for IPOs last year. Such long-anticipated rule changes could lead to Hong Kong avoiding losing out on more promising listings by the likes of e-commerce giant Alibaba Group Holding Ltd.

In a response to Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor's remarks about how she hoped Alibaba would consider returning to list in Hong Kong, Alibaba founder Jack Ma said at an event in Hong Kong on Tuesday last week that he would "seriously consider" listing subsidiaries in the financial hub.

The Chinese mainland is currently home to some 100 fast-growing companies, most of which have long considered the public listing stage. Smartphone-maker Xiaomi Inc is reported to be in talks with investment banks about going public as soon as 2018, with Hong Kong currently considered the most likely destination. Xiaomi is often hailed as one of the oldest unicorns around the globe, as well as one of the world's top three unlisted unicorns next to Alibaba's Ant Financial Services Group and Uber Technologies Inc.