Surfing boards

Reformations within China have amped up its capital market offerings, not to mention the Star Market’s stellar introduction. With US-based mainland companies looking homeward, is Hong Kong still the pearl of the oriental bourses? Sophia Luo reports

Reform is a consistent theme across capital markets in mainland China and Hong Kong. With the launch of a new sci-tech innovation board known as the Star Market in Shanghai last year, the implementation of the newly amended Securities Law this year, and much-awaited registration-based initial public offering (IPO) reforms on Shenzhen’s start-up board, ChiNext, China has been forging ahead with a sweeping capital market overhaul.

“As the newly revised Securities Law takes effect, and registration-based reforms get off the ground in the Star Market and ChiNext, the registration system, with information disclosure at its core, truly becomes the cornerstone of the capital market in the Chinese mainland and brings about a chain of changes on relevant systems,” notes Zhang Liguo, chief partner at Grandway Law Offices in Beijing.

“We are embracing a highly predictable, ultra-inclusive capital market. Such a market opens the door of direct financing for all sorts of innovative companies, and small- and medium-sized private enterprises, in a more convenient, cost-effective manner,” he says.

Zhang Xiaoman, a Beijing-based partner at Commerce & Finance Law Offices, says registration-based reforms will bring the capital market back on track for serving the real economy. “Especially as the coronavirus pandemic rampages across the globe, rebuilding the supply chain and developing a circulation of domestic industries should be an essential part of our efforts to resume production and restart the economy,” he says.

“Companies at the upstream of the supply chain are in need of business rearrangement, which means a pressing and growing demand for fundraising. This is a particularly well-timed overhaul for smaller leading enterprises in certain segments of industry based in the Yangtze and Pearl River deltas. A more predictable timetable has now been set out for the once time-consuming, lengthy IPO process.”