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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Hong Kong Exchanges and Clearing Limited    388   HK0388045442

HONG KONG EXCHANGES AND CLEARING LIMITED

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Hong Kong plans to shorten IPO settlement time to one day

11/16/2020 | 05:56am EST
FILE PHOTO: HKE logo is seen at the financial Central district in Hong Kong

HONG KONG (Reuters) - Hong Kong plans to shorten the time lag between an initial public offering (IPO) being priced and when the company's shares start trading to as little as one day from the current average of more than five.

The proposed change, which was announced by bourse operator Hong Kong Exchanges and Clearing (HKEX) in a consultation paper on Monday, has long been on the wish-list of bankers and investors in the Asian financial hub.

The time lag is particularly problematic when markets are volatile, as investors say it leaves them exposed to market falls between the shares pricing and trading.

"It is a once in a generation reform we have been wanting to do for a long time," Charles Li, HKEX's outgoing CEO told the media. The new arrangements replace the multiple existing separate channels and paper-based communication with a single digital platform for the exchange, IPO bankers, retail brokers and regulators, allowing listings to proceed more quickly.

HKEX does not expect to launch the new platform before mid 2022.

Jason Elder, a partner at law firm Mayer Brown, said the reforms were potentially a significant improvement as market risk and the manual process in the current arrangments "put Hong Kong at a competitive disadvantage compared to other global markets such as New York or London."

"It is also difficult to scale the current system for the really big IPOs or when you have a number of separate listings happening simultaneously," he added.

$38.8 billion has been raised in IPOs and secondary listings in Hong Kong so far this year, placing the exchange second globally behind the Nasdaq, according to Refinitiv.

Large secondary listings by companies including by New York-listed firms like Netease and KFC China operator Yum China acocunted for nearly half that total.

Li said the pricing-trading gap was particularly important for such companies whose shares were already trading elsewhere.

The consultation paper also proposes changes to reduce the impact of IPOs on Hong Kong dollar liquidity.

Hong Kong interbank lending rates surged in the build-up to Ant Group's $37 billion joint Hong Kong Shanghai IPO and hit nine-year lows after the listing was suddenly suspended earlier this month.

Currently, mass-market focused brokers must pay in advance for all the shares bid for by their clients, potentially tying up large amounts of cash.

Under the new proposals, brokers would only put up cash in advance for 10% of shares bid for by clients.

(Reporting by Alun John; Editing by Sherry Jacob-Phillips, Ramakrishnan M. & Simon Cameron-Moore)

By Alun John


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
HONG KONG EXCHANGES AND CLEARING LIMITED -0.87% 510.5 End-of-day quote.20.12%
NASDAQ COMP. -0.29% 13500.783627 Delayed Quote.4.41%
YUM CHINA HOLDINGS, INC. -1.84% 58.27 Delayed Quote.3.89%
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Financials
Sales 2020 18 791 M 2 424 M 2 424 M
Net income 2020 11 643 M 1 502 M 1 502 M
Net cash 2020 102 B 13 135 M 13 135 M
P/E ratio 2020 57,4x
Yield 2020 1,55%
Capitalization 646 B 83 281 M 83 275 M
EV / Sales 2020 28,9x
EV / Sales 2021 24,8x
Nbr of Employees 2 182
Free-Float 94,0%
Chart HONG KONG EXCHANGES AND CLEARING LIMITED
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Hong Kong Exchanges and Clearing Limited Technical Analysis Chart | 388 | HK0388045442 | MarketScreener
Technical analysis trends HONG KONG EXCHANGES AND CLEARING LIMITED
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 437,41 HKD
Last Close Price 510,50 HKD
Spread / Highest target 12,6%
Spread / Average Target -14,3%
Spread / Lowest Target -43,8%
EPS Revisions
Managers and Directors
NameTitle
Chi Kin Tai Co-President, Chief Executive & Operating Officer
Romnesh Lamba Co-President
May Lung Cha Non-Executive Chairman
Vanessa Lau Group Chief Financial Officer
Chung Kwong Leung Group Chief Technology Officer
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