HONG KONG: Hong Kong Exchanges and Clearing (HKEx) will look into possible acceleration of the rights issue and initial public offering (IPO) application process, HKEx listings division head Mark Dickens said yesterday.

He said any reduction in the application process will help facilitate fund-raising exercises of companies listed on the local stock market.

It takes locally-listed companies seven weeks to undertake a rights issue compared with five weeks in Singapore and three to four weeks in the UK.

Some investment banks have complained against the length of time that it takes for fund-raising applications to be given the green light by HKEx, which operates the local bourse. They said the lengthy application period is a hindrance to fund-raising on the local market.

Dickens said the stock exchange may conduct public consultations on this issue. Mike Wong, chief executive of the Chamber of Hong Kong Listed Companies, said any reduction in the application process will benefit both listed companies and shareholders of listed firms.

"If the time it takes to get approval for a rights issue application is too long, listed companies are put in a disadvantaged position in their bid to get needed funding," Wong said.

"Shortening the application period will certainly help listed companies to raise capital," he said.

He added that an acceleration of the application process will also help reduce uncertainties over share price movements, which is good to the investing public.

"Prior to the recent completion of HSBC's huge rights issue, its share price fluctuated a lot, and this put its shareholders in a very unfavorable situation," he said.

Despite some public concerns, Dickens said HKEx does not see any pressing need at the moment to amend existing regulations relating to listed companies' issuance of profit-warning announcements.

He said listed companies have been given clear guidance relating to the issuance of profit-warning announcements.

He said HKEx is currently in talks with the Securities and Futures Commission (SFC) on the possibility of easing IPO requirements.

Among the issues being considered by both institutions is the prospect of allowing firms with sound finances, but which might have been hit by one-off fair value losses, to get listed on the local bourse.

Dickens admitted that current listing procedures in Hong Kong are complicated and some streamlining may be brought in later this year.

Chamber of Hong Kong Listed Companies' Wong said any easing in the listing procedures provide more flexibility for companies to get listed in Hong Kong.

"However, it is also important to educate investors on the need to differentiate the performance of one company against another," he added.

(HK Edition 04/18/2009 page2)