06/01/22

HONG KONG: Finalised Cybersecurity Rules Revive IPO Hopes.

As published on finews.asia, Thursday 6 January, 2022.

Despite a tech crackdown, mainland China’s ability to tap the Hong Kong market for IPOs is turning out to be less onerous with finalized regulations suggesting that the city will not undergo the same stringency as foreign hubs.

Companies with more than a million users seeking foreign listings will have to undergo a rigorous data security review as of February 15 this year, according to the Cyberspace Administration of China’s published rules earlier this week.

The term, «foreign», was noteworthy as it differed from a related notice last year that instead used the term «overseas» – a description often applied to cities outside of the mainland – and specifically mentioned the scrutiny of Hong Kong listings.

This could potentially signal relief for Hong Kong which was originally expected to be a smooth, top option for listed Chinese firms – especially from the tech sector – should they be pressured to delist from U.S. exchanges.

The rule change could also provide much needed support for Hong Kong’s IPO market which saw its rankings as a top global hub fall for the first time since 2017 to fourth place behind Nasdaq, New York Stock Exchange and Shanghai Stock Exchange, as of November 2021.