Hong Kong Small and Medium Listed Companies Association: Speed up listing system reforms to welcome the return of Chinese concept stocks.

On April 17, Dr. Xi Chunying, Chairman of the Hong Kong Small and Medium Listed Companies Association, wrote an article stating that in order for Hong Kong to become the preferred listing destination for Chinese concept stocks and high-growth enterprises, it must break through institutional bottlenecks with reforms and stimulate market vitality with innovation. It is necessary to build a clear and layered capital market system, clearly defining the different roles of the main board for mature companies, the growth-focused GEM board for innovative enterprises, and the OTC (over-the-counter) market for early-stage projects, providing full-cycle financing services for companies at different stages of development. Adaptive regulatory mechanisms should be established, abandoning rigid financial performance criteria and implementing flexible regulation for companies with high growth potential, technological barriers, or innovative business models in terms of profitability requirements and market capitalization. By lowering the listing threshold, expanding market inclusivity, and enhancing the attractiveness of new economy enterprises, the compatibility issues of Chinese concept stock returns can be addressed at the institutional level. The original text is as follows: Speeding up listing system reform, welcoming the return of Chinese concept stocks Recently, the Financial Secretary of Hong Kong, Paul Chan Mo-po, pointed out in public that despite the temporary fluctuations in the stock market due to external factors, the market operation has always remained orderly, fully demonstrating Hong Kong's stability and attractiveness as an international financial center amid the increased uncertainty in the global economy. He specifically emphasized that the Securities and Futures Commission and the Hong Kong Stock Exchange have been instructed to lay the groundwork early to ensure that Hong Kong becomes the preferred listing destination for the return of Chinese concept stocks. The Secretary for Financial Services and the Treasury, Christopher Hui Ching-yu, also expressed confidence in maintaining efficient and orderly market operations in Hong Kong, believing that Hong Kong has institutional advantages to remain competitive in a complex environment. At the same time, U.S. regulatory authorities have signaled an increase in pressure to delist Chinese concept stocks. U.S. Treasury and securities regulators have publicly stated that "mandatory delisting measures cannot be ruled out" during the review process, indicating a continued escalation in the institutional game between China and the United States in the financial sector. As the United States weakens the global financing capabilities of Chinese companies through measures such as restricting investment in China and strengthening threats of delisting, China is constructing a risk hedging system through capital market opening measures such as the Science and Technology Innovation Board reform and the mechanism for secondary listings on the Hong Kong Stock Exchange. This two-way game accelerates the regional restructuring of global capital flows and helps to demonstrate the embryonic form of a "dual-track" financial system. In this strategic landscape, Hong Kong, as the core hub connecting mainland China and international capital, naturally becomes the optimal choice for the return of Chinese concept stocks. In order to effectively shoulder this historical mission, Hong Kong must use systemic reform as a lever to create an institutional platform that can "absorb the return of Chinese concept stocks and serve the development of the new economy," and consolidate its leading position in the reshaping of the global financial landscape. The Hong Kong Small and Medium Listed Companies Association recently held a seminar, and everyone unanimously agreed that facing the dual challenges of regulatory differences between China and the United States and the restructuring of the global financial system, Hong Kong's capital market needs to advance listing system reform with forward-thinking ideas, comprehensively enhance market receptiveness and institutional resilience. The specific suggestions are as follows: 1. Build a clear and layered capital market system In order to compete with the low-threshold system advantages of U.S. stock markets such as NASDAQ, Hong Kong needs to accelerate the establishment of a multi-tiered capital market structure. It is recommended to clarify the differentiated positioning of the main board serving mature companies, the GEM board focusing on growth-oriented innovative enterprises, and the OTC (over-the-counter) market incubating early-stage projects. Drawing on the experience of capital market reforms in mainland China, through institutional innovation, form a market framework that complements and organically connects functions to provide full-cycle financing services for companies at different stages of development. In the main board market, implement "industry-specific differentiated regulation" to establish information disclosure standards and continuous monitoring requirements tailored to different industries such as technology, consumption, and finance; establish a "fast-track listing channel for innovative enterprises" in the GEM, allowing companies that are not yet profitable but have core patented technologies or disruptive business models to apply for listing based on a combination of "market value + research and development investment + user base"; in the planned OTC market, pilot a "incubation-nurturing-transfer" ladder mechanism, establish convenient transfer channels to the GEM and main board, introduce angel investment tax incentives for early projects, and attract global startups to settle. 2. Establish adaptive regulatory mechanisms Abandon rigid financial performance criteria and implement flexible regulation for companies with high growth potential, technological barriers, or innovative business models in terms of profitability requirements and market capitalization. By lowering the listing threshold, expanding market inclusivity, and enhancing the attractiveness of new economy enterprises, address the compatibility issues of the return of Chinese concept stocks from an institutional perspective. 3. Activate the efficiency of resource allocation In response to the problem of "zombie companies" on the main board, propose to moderately relax cross-industry merger and acquisition restrictions, and establish a standardized mechanism to revitalize "shell resources." By guiding specialized and innovative enterprises to go public through reverse mergers, optimize market resource allocation, and provide diversified listing paths for Chinese concept stocks and local enterprises. Establish a "Special Task Force for Market-Oriented Restructuring of Shell Resources," create a transparent database of shell company information, regularly release shell resource valuation guidelines and case studies; allow "hard technology" enterprises that align with national strategic directions to implement cross-industry mergers and acquisitions through "business transformation + asset replacement", simplify the restructuring approval process involving areas such as biomedicine and new energy; introduce a "green channel for reverse mergers and listings" to reduce approval time by 50% for restructuring projects where the acquirer is a Chinese concept stock listed overseas; establish a "mechanism for clearing invalid assets," warning companies with a market value below HK$100 million for three consecutive years with no substantial business operations to delist, and promote the concentration of shell resources on high-quality enterprises. 4. Enhance market trading vitality To address the issue of insufficient liquidity in the stocks of small and medium-sized enterprises, accelerate the introduction of market makers system, optimize trading mechanism design, moderately lower the investor access threshold, and actively guide.Long-term funds and professional institutions participate. By building a healthy trading ecosystem, market pricing efficiency and resource allocation function are improved.Implement the "multi-market maker + liquidity tiering" system, allowing qualified commercial banks, insurance companies, and international investment banks to act as market makers, imposing differentiated market-making obligations on stocks with a market value below HK$5 billion; simultaneously launch the "Chinese concept stocks return ETF" to package and list returning enterprises, lowering the investment threshold for retail investors; pilot special products such as the "green finance index" and "technology leading index" to attract global asset management institutions for allocation. V. Establish a convenient return channel Provide customized services for the secondary listing or dual primary listing of Chinese concept stocks, including speeding up approval processes, coordinating cross-border regulations, and exempting information disclosure arrangements, effectively reducing the institutional costs for enterprises, and enhancing the certainty and feasibility of return decisions. Establish a "Chinese concept stocks return special service office" at the Hong Kong Stock Exchange, providing a "one-stop connection" from listing application to subsequent supervision, compressing the approval cycle for secondary listing of Chinese concept stocks with a market value exceeding a certain scale according to the "A+H" model; for enterprises already listed on the US stock market, granting them "core information exemption disclosure" during the transition period after return, simplifying disclosure of financial data, business descriptions, etc., that overlap with Hong Kong regulatory rules. VI. Strengthen the "super connector" strategic positioning Relying on institutional reforms and service upgrades as dual drivers, consolidate Hong Kong's unique advantages as a two-way channel for "introducing in" and "going out". While serving national strategies, continuously strengthen its role as a global capital allocation hub by deepening integration with international financial regulations. Establish the Greater Bay Area Capital Market Alliance Initiate the establishment of the "Guangdong-Hong Kong-Macao Greater Bay Area Capital Market Alliance," jointly build a "cross-border listing resource sharing platform" with Shenzhen, Guangzhou, and other cities, regularly hold "Chinese concept stocks return policy briefings," collaborate with mainland high-tech zones and economic development zones to tap into high-quality enterprise resources; promote the "Cross-border Interconnection 2.0 Plan" between Hong Kong and emerging markets such as Southeast Asia and the Middle East, expand the scope of the Stock Connect to include Chinese concept stocks listed on exchanges in Singapore, Dubai, etc., pilot a "multi-currency trading settlement" mechanism; introduce the International Sustainability Standards Board (ISSB) disclosure standards, establish a "green finance listing certification system" to attract global ESG funds allocation; collaborate with top universities such as HKU to conduct regulatory technology (RegTech) research, regularly publish the "Global Capital Market Competitiveness White Paper," enhance Hong Kong's voice in international financial rule-making. Conclusion For Hong Kong to become the preferred listing destination for Chinese concept stocks returning and high-growth enterprises, it must break through institutional bottlenecks with reforms and stimulate market vitality with innovation. Only by seizing the historic opportunity of reshaping the global financial structure proactively, constructing a more inclusive and competitive capital market system, can it solidify its position as an international financial center in the complex and ever-changing international environment, and provide strong support for the global development of Chinese enterprises.