Small firms yank Hong Kong IPOs after official crackdown

Bloomberg

Four planned listings on Hong Kong’s small-company exchange, known for its wild price swings, were shelved this week in the wake of a warning that participants would be more thoroughly scrutinized.
Logistics provider XiangXing International Holding Ltd. said it will postpone its initial public offering on the Growth Ente-
rprise Market after receiving inquiries from regulators. Local lingerie brand My Heart Bodibra Group Ltd., swimming pool contractor Hao Bai International (Cayman) Ltd. and knitwear supplier Speed Apparel Holding Ltd. all announced this week they will let plans for GEM debuts lapse after failing to meeting listing conditions.
Closer scrutiny of GEM, the city’s second exchange, comes after years of extreme price movements, with shares rising by thousands of percent before plunging. Charles Li, chief executive officer of bourse operator Hong Kong Exchanges & Clearing Ltd., said Monday that wrongdoing on GEM damages Hong Kong’s status as a financial center. The Securities and Futures Commission signaled a tougher approach last week when it shocked the market by suspending shares of GME Group Holdings Ltd. on its debut trading day.
“This happening to different companies repeatedly is actually quite rare,” Mike Wong, chief executive officer of the Chamber of Hong Kong Listed Companies, said by phone Tuesday. “But on the positive side, the SFC clarifying what it’s looking for will give companies a better idea whether their listings may face problems.”
One issue concerning GEM stocks is that many have a small portion of their shares available to trade, which leads to low volumes and can exacerbate price swings. Three of the four firms failed to satisfy a rule governing how share placements are distributed prior to trading, according to their filings. The requirement was highlighted by the SFC and HKEX in a joint statement Jan. 20 that reminded GEM participants to ensure a fair and open market.