The new stock queen advocates flexible pricing mechanism to reduce the maximum of 20% of the new economic stocks trial
In the second half of the year, Hong Kong stocks continued to swell and became more volatile, dragging down the recent increase in the amount of new shares of “big baht” and even postponing listing. Tricor’s Managing Director of the Hong Kong Commerce Department and Zhong Yuhong, who is known as the “New Share Queen", can consider giving greater flexibility in the pricing of new shares, such as a 20% reduction in flexible pricing mechanisms. The company can adjust to the latest market conditions, and there is no need to worry about the final suspension of the listing due to too high pricing. She also pointed out that the current peers of the new economy and biotechnology stocks are still relatively small, and Price Discovery is more difficult than traditional new stocks. It is suggested that the above new arrangements can be implemented for such shares.
Postponing the listing process is complicated and expensive
The Hong Kong Stock Exchange (00388) issued a guidance letter in February this year to introduce a flexible pricing mechanism for new shares. The listed company can reduce the offer price by up to 10% without triggering the withdrawal mechanism. The relevant mechanism is a trial and will be reviewed in February next year. . Among them, Tongcheng Yilong (00780) and Baby Tree (01761), which were listed in November, all disclosed in advance in the prospectus or would use a flexible pricing mechanism. In the end, both companies could be listed on the original offer price.
Zhong Yuhong believes that the recent market conditions are affected by macro factors, and the volatility is getting bigger and bigger. The existing IPO price discovery mechanism may not fully reflect the latest market conditions. She continued to point out that Hong Kong could further consider broadening the existing flexible pricing mechanism. For example, the price reduction range will be extended from a maximum of 10% to 20%, which will allow listed companies to have more room to respond to market changes in pricing.
At present, there are a lot of new IPOs listed in Hong Kong. However, Zhong Yuhong said that how many companies can successfully go public is difficult to predict. In particular, many new stocks are worried that when the market conditions go down, the original offer price range may not be able to adapt to investors. If the final shelving of the listing is more than worth the loss, I would rather wait for the market to improve and restart the IPO process.
In fact, according to the mechanism, if the final listing price of new shares is outside the scope of the offer price, it will trigger the “withdrawal mechanism”, including the need to issue supplementary listing documents, extend the prospectus, and arrange for investors who have applied for the application to withdraw the application. The process is complicated and expensive.
Pricing can still continue to be offered
If the pricing mechanism can be further relaxed, Zhong Yuhong believes that it will help the new stocks continue to go public when the market conditions are poor. “Even if the (share price) price falls, the single Deal can still continue, as long as the listed companies agree. Some companies want to Listing, because it costs a lot of money, such as attorney fees and audit fees. They want to go public and take the money to do business."
Although the number of new shares has been raised from time to time or the listing has been delayed, Zhong Ronghong expects that Hong Kong will still be the first place in the world to raise funds for new shares this year. Looking forward to next year, she believes that the new economy and biotechnology companies are still the theme of the new stock market; as for investors’ enthusiasm for such shares seems to have cooled sharply in recent days, she believes that the new stock market relies on sentimental leadership, “as long as there are two or three consecutive (New economy or biotech stocks) will perform well and the atmosphere will return."