Hong Kong Stock IPO Filing Pace Remains Unchanged, Listing Mechanism Reform Does Not Currently Involve "Red Chip Structure"

Since the beginning of this year, 30 new stocks have been listed in the Hong Kong stock market (29 IPOs and 1 introduction listing), including 29 on the Main Board and 1 on GEM, raising a total of over HKD 100 billion.

Just as the Hong Kong Securities and Futures Commission (SFC) is strictly controlling the quality of IPO listing documents and even limiting the number of signature items for sponsors, the number of IPO applications submitted in Hong Kong has not decreased this year. From January to February, there were as many as 164 applications for Main Board listings, and the Hong Kong Stock Exchange (HKEX) may be processing over 500 IPO applications in total.

However, recent market rumors suggest that companies with red-chip structures are not being accepted for listing in Hong Kong. An analyst from a Chinese investment bank explained that the review of mainland companies applying for Hong Kong IPOs involves not only the HKEX but also requires filing with the China Securities Regulatory Commission (CSRC). The HKEX’s first-phase listing rule amendments and planned market reform do not currently involve “red-chip” companies. As of now, only one red-chip company has received a filing notice this year.

The speed of IPO applications in Hong Kong remains unchanged

In December last year, the SFC and HKEX jointly sent a letter to IPO sponsors, requiring them to ensure the quality of listing application documents. Subsequently, there were reports that regulators would limit the number of signature items for sponsors.

This move drew widespread attention and response from the market. During the National Two Sessions, NPC member and Honorary President of the Hong Kong Chinese Securities Association, Tan Yueheng, suggested that the quality of Hong Kong IPOs should be strictly controlled to avoid damaging Hong Kong’s international reputation. He emphasized the need for a forward-looking approach to safeguard the healthy and sustainable development of Hong Kong’s capital markets.

Despite this, the pace of IPO applications in Hong Kong has not slowed down this year. In fact, the number of new applications in January and February far exceeded that of the same period last year.

Data from HKEX shows that from January to February, 164 Main Board IPO applications were accepted. Including existing applications from 2025 that are still pending and reapplications, the total reaches 530, not counting the 8 GEM listing applications. Some applications have exceeded processing deadlines, and there are 29 applications that have been rejected, returned, or withdrawn. Additionally, some IPO projects have already been listed or have not been approved by the Listing Committee.

Previously, HKEX Listing Department Head Wu Jiexuan emphasized to reporters: “The main concern from regulators has been the quality of listing documents. The quality of the application materials does not equate to the quality of the listed companies. HKEX has always maintained strict standards for company quality. Ensuring the quality of listed companies and protecting investors are not mutually exclusive goals; both can be achieved simultaneously.”

Market reform does not currently involve “red-chip” companies

Recently, HKEX has optimized its listing rules, relaxing the criteria for innovative companies with different voting rights, allowing a maximum ratio of 20:1; improved rules for secondary listings to facilitate overseas-listed issuers to list in Hong Kong; and permitted all new companies planning to IPO to file confidentially, while strengthening the return mechanism.

This is the first phase of HKEX’s rule revisions and does not involve adjustments to “red-chip” structures, nor has it been mentioned in future reform plans.

Recently, HKEX Listing Committee Chairman Huang Jiaxin revealed that, beyond the first phase of rule amendments, HKEX also plans to conduct market consultations on establishing alternative trading platforms and to review the listing systems for special purpose acquisition companies (SPACs) and specialized technology firms.

It is foreseeable that the listing systems for SPACs and specialized tech companies may be further optimized and revised in the future. However, HKEX is unlikely to arbitrarily exclude “red-chip” companies without reason.

A Chinese investment banker analyzed: “Not all ‘red-chip’ companies are the same. Some ‘red-chip’ structures may involve illegal setups or lack necessity altogether. They might be suspected of asset transfer or regulatory evasion, which requires further feedback. There’s also the possibility that ‘red-chip’ structures need to be dismantled before reapplying for an IPO.”

In fact, looking at the filing progress, as of March 20, a total of 41 mainland companies’ IPO applications have been approved by the CSRC for listing in Hong Kong this year. Only one of these is a “red-chip” company—Manycore Tech Inc., which submitted its overseas listing filing through its domestic operating entity, Hangzhou Manycore Information Technology Co., Ltd.