HONG KONG - HONG KONG'S stock exchange was the world's hottest IPO market last year with more than US$30 billion (S$41.7 billion) in new listings, but it stands accused of sacrificing quality for quantity.
The bourse is keen to stay ahead of rival Shanghai and attract non-Chinese companies, but criticism has mounted after the controversial approval of Russian aluminium giant UC Rusal's share sale and a string of listing debacles. The exchange repeatedly delayed approving Rusal's US$2.6 billion initial public offering (IPO).
Unproven allegations that chief executive Oleg Deripaska has links to organised crime dogged the world's biggest aluminium maker in its attempts to become the first Russian company to list in Hong Kong. And when the listing was finally approved last month, the Securities and Futures Commission (SFC) stepped in with what observers call 'unprecedented' restrictions for the IPO.
The SFC stipulated a minimum investment in Rusal equivalent to about US$130,000 - reportedly a bid to shield small investors from the complicated offering.
'It was quite a surprise that the SFC agreed to Rusal's listing,' said Raymond Chan, acting director of the Centre for Corporate Governance and Financial Policy at Hong Kong Baptist University. 'I think the exchange and SFC are aware of the quality problem.'
Mr Chan warned that the exchange could be putting its reputation at risk. 'Listing in Hong Kong would be associated with low quality.' -- AFP
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