HKEX(HK:00388) 2 1 Shi Ji Jing Ji Bao Dao·2025-08-04 13:56Core Viewpoint - The new IPO regulations by the Hong Kong Stock Exchange (HKEX) aim to optimize market mechanisms and enhance international competitiveness, particularly by adjusting the allocation of shares to institutional investors and retail investors [2][8]. Group 1: Changes in IPO Regulations - The minimum allocation of new shares to the book-building portion has been reduced from 50% to 40%, ensuring that at least 40% of new shares are allocated to institutional investors [2][3]. - The new regulations introduce two mechanisms (A and B) for share allocation, allowing companies to choose their preferred method for public offerings [4][6]. - Mechanism A retains the original approach of adjusting allocations based on oversubscription multiples but reduces the allocation percentages for public offerings [4]. - Mechanism B allows issuers to pre-select a fixed allocation percentage for public offerings, ranging from 10% to 60%, without a reallocation mechanism [4][6]. Group 2: Market Impact and Trends - The new rules are expected to improve market liquidity and investor confidence, making the HKEX more attractive for high-quality companies to list [8][10]. - As of July 25, 2025, 52 companies have listed on the HKEX, nearing the total number of listings in 2024 and 2023, indicating a resurgence in the IPO market [6]. - The total funds raised through IPOs in 2025 reached HKD 127.36 billion, the highest since 2021, reflecting a significant increase in market activity [6]. Group 3: Institutional vs. Retail Investor Dynamics - The new regulations are designed to balance the interests of institutional and retail investors, with a focus on enhancing the role of institutional investors in the IPO process [7][10]. - The changes are expected to lead to a decrease in the allocation of shares to retail investors, thereby increasing the likelihood of institutional participation in pricing and stabilizing post-IPO stock performance [3][10]. - The shift in allocation dynamics may result in higher success rates for IPOs of quality companies while allowing poorer quality companies to attract more retail investors [9][10].