Asian regulators tighten IPO quality controls, slowing new listings without dampening capital demand

Securities regulators in Hong Kong and mainland China are intensifying quality controls on initial public offerings, a shift analysts say will trim the number of new listings without diminishing the appetite for capital-raising.

China regulator asks for fresh filings

The China Securities Regulatory Commission recently took the unusual step of requesting nine mainland companies that had already secured pre-approval for listings to submit supplementary materials. The CSRC asked for details on fund usage, shareholding structures and pending litigation.

Hong Kong watchdog halts biotech trading

Hong Kong's Securities and Futures Commission directed the city's bourse operator to suspend trading of US-based biotech firm Cloudbreak Pharma. The SFC explicitly expressed concerns that the company's IPO could have been "rigged" to create an artificial impression of demand.

Quality over quantity

The actions by both regulators amount to wake-up calls to bankers and other intermediaries, signalling an emphasis on quality over quantity amid fervour for listings. According to analysts, the tighter scrutiny could slow the flow of new listings but would not reduce underlying demand.

Source: South China Morning Post