JP Morgan: New regulations for sponsors will not hinder high-quality enterprises from listing in Hong Kong. The pace of new IPOs will become healthier.

The Hong Kong Securities and Futures Commission recently issued a letter to regulate sponsors. Nelly Pai, Managing Director and Head of Hong Kong Listings and Corporate Financing at J.P. Morgan, stated in an interview that the new rules clarify the limit on the number of new stocks that a sponsor can handle and require it to be reasonable and sustainable. She believes that this will not hinder high-quality companies from listing in Hong Kong, and she anticipates that the pace of new IPOs this year will be more healthy, with the number of large IPOs raising $1 billion or more not less than in 2025. Previously, the Hong Kong Securities and Futures Commission's letter revealed that the quality of work of some sponsors has declined, with some sponsors taking on far more new stock projects than they can handle, with the most severe case being "one person handling 19 cases." In addition, some investment banks overly rely on "foreign workers" lacking local IPO experience, and outsource too much work to lawyers, accountants, and other external professionals. It is understood that a total of 13 sponsors have received warning letters from the Securities and Futures Commission due to recent shortcomings. In response to the Hong Kong Securities and Futures Commission's measures, Nelly Pai stated that if a sponsor is handling 6 or more new stocks at the same time, it is considered to have insufficient resources, and the market can understand that each person can only be responsible for a maximum of 5 new stocks at a time. She reiterated that this letter is just further strengthening and clarifying guidelines, rather than a sudden "tightening." When asked whether market overcapacity is caused by talent drain, Nelly Pai stated it's difficult to comment on the practices of other industry players, emphasizing that the core issue lies in the institution's choice between "quantity" and "quality." She also emphasized that the quality of companies listing in Hong Kong is very good and believed that pursuing a quality market is the way forward. Nelly Pai also stated that the new measures of the Hong Kong Securities and Futures Commission will not affect high-quality companies listing in Hong Kong, and the pace of new IPOs will be more reasonable and healthy. There are 8 large IPOs raising $1 billion or more (about $78 billion HKD) in 2025, totaling $18.3 billion USD (about $142.7 billion HKD). According to current information, there will be no less large IPOs this year compared to 2025, and the new IPO market is still very hot. According to media statistics, there are at least 15 new stocks planning to list in Hong Kong this year with a fundraising of over $1 billion USD, including key suppliers of NVIDIA, high-end PCB leader Victory Giant Technology, and optical communication module manufacturer Jiangsu Changxu. It is conservatively estimated that these 15 potential new stocks will raise over $200 billion HKD. Nelly Pai added that as of February 11 this year, 20 companies have priced and listed in Hong Kong, raising $9.4 billion USD (about $73.3 billion HKD), higher than the $8.5 billion USD raised during the same period of the "boom" year of 2021, showing a strong start to the year. The issuance market remains active, following the $66 billion USD refinancing in 2025, the fundraising amount this year has reached one-third of the total in 2025.