Data from the Hong Kong Securities and Futures Commission shows that in 2025, more than 460 new listing applications were received throughout the year, with over 110 companies successfully going public, raising more than HKD 286 billion. In 2025, Hong Kong’s stock financing ranked first globally. As of January 29, 2026, more than 420 companies were in the queue for listing. However, behind the bustling scene, a dangerous signal is emerging: an increasing number of new shares are coming to the market, but their quality is becoming increasingly uneven.

Some prospectuses have only a few lines of content in key chapters, some due diligence reports are repetitive templates, and some sponsors’ project leaders remain ‘unreachable’ for extended periods… More alarmingly, some sponsor institutions simultaneously undertake six or seven or even more IPO projects, resulting in severe imbalance in staffing, making it impossible to conduct in-depth verification of the fundamentals of enterprises.

This ‘assembly-line listing’ operation is eroding the institutional foundation of the market. When the core function of sponsors shifts from ‘quality control’ to ‘process clearance,’ and when the listing review regresses from ‘substantive judgment’ to ‘formal examination,’ investors face not rigorously screened high-quality targets but rather elaborately packaged uncertain risks.

Compared to short-term fluctuations in stock prices, information asymmetry during the listing process poses a deeper and more lasting harm, undermining the fairness and transparency of the market.

With the diversification of listed companies across industries, particularly the growing number of firms in specialized sectors such as new economy and biotechnology, the gap in information comprehension between retail investors and professional institutions continues to widen. Sponsors should act as a bridge to close this gap, but in practice, some sponsors disclose information that is either overly technical or overly simplistic, failing to genuinely help investors understand the essence of the enterprise.

Who will ensure the bottom line for ‘Hong Kong stock quality’?

In an environment where sponsors lack sufficient self-discipline and market short-term interest-driven behaviors are intense, regulatory authorities may need to establish a multi-layered quality assurance system to uphold market fairness and protect investors’ legitimate rights.

It is necessary for sponsors to return from being ‘listing intermediaries’ to ‘quality intermediaries.’ This requires internal evaluations to shift from ‘project quantity’ to ‘project quality and subsequent performance,’ and, more importantly, cultivating a cultural consensus within the industry that values professional reputation. In the long run, the market should vote with its feet, allowing sponsors who emphasize quality to gain brand premium.

Regulatory Measures: Four Key Dimensions

The WeChat Official Account of the Hong Kong Securities and Futures Commission emphasized specific requirements for listing sponsors, implementing targeted supervision from personnel allocation to project procedures.

First, the SFC explicitly requires sponsors to maintain a ratio between the number of active projects declared and the number of key personnel appointed as sponsors, directly addressing industry pain points—some sponsors blindly expand their projects without correspondingly strengthening their professional teams, leading to diluted project quality. By setting an intangible threshold, regulators may aim to guide the market from prioritizing ‘quantity’ to emphasizing ‘quality’.

Second, the declaration of personnel participating in IPO sponsorship work who have not passed the required examinations targets the long-standing industry phenomenon of ‘shadow teams’—junior staff or outsourced teams performing the actual work lack sufficient qualifications.

Third, ‘serious omissions or unsatisfactory responses will lead to project suspension’—this regulation may enhance the deterrent effect of regulatory inquiries. In the past, some sponsors treated regulatory queries superficially; now, perfunctory responses will incur real costs, forcing sponsors to establish more rigorous verification and response mechanisms internally.

Fourth, the SFC demands stricter professional standards for all personnel engaged in IPO sponsorship work, potentially aiming to systematically raise professional requirements.

The deterrent power of regulation lies not only in detailed rules but also in the rigidity of enforcement. The Hong Kong SFC disclosed that as of December 31, 2025, 16 listing applications had been suspended. The SFC also required sponsors with strained resources and potential compliance risks to complete comprehensive self-inspections within three months. Sponsors simultaneously handling six or more active projects are mandatorily required to submit resource rectification plans, turning ‘paper rules’ into ‘market constraints’.

Only by making the cost of negligence far outweigh short-term underwriting gains can sponsors be compelled to abandon the ‘rushed work’ mindset and truly implement due diligence—whether it involves thorough scrutiny of corporate related-party transactions or precise disclosure of new economy enterprises’ technical risks, information must be presented in ways investors can understand and verify, bridging the professional information gap.

Building an Investor Protection Network

Protecting the legitimate rights and interests of investors is the core focus of the quality assurance system for Hong Kong stocks and the ultimate goal of regulatory and industry reforms.

True investor protection does not guarantee against investment losses but ensures that investors make independent decisions based on full and clear information. The SFC’s initiatives may be driving the shift in protection philosophy from ‘outcome-based protection’ to ‘process-based protection’.

By requiring sponsors to enhance the quality of information disclosure, regulators are essentially providing investors with a level playing field. Only when everyone can make decisions based on information of similar quality can the market truly reflect the efficiency of resource allocation.

Within the ecosystem of the capital market, investors are an indispensable component. They allocate funds to support business growth based on trust in market rules and expectations for a company’s future development. However, when information asymmetry arises during the listing process, this trust is challenged.

As a bridge connecting issuers and investors, sponsors should ideally narrow this gap through comprehensive information disclosure and clear risk warnings. In practice, however, some sponsors fail to fulfill their responsibilities, resulting in overly technical or simplistic disclosures that do not effectively help investors understand the essence of the enterprise and its potential risks.

The regulatory measures recently adopted by the Hong Kong Securities and Futures Commission (SFC) aim to ensure that investors can make informed decisions in a more transparent and equitable environment. By strengthening staffing requirements, raising professional standards, and enhancing supervision over project processes, regulators seek to address these issues at their root and provide stronger protection for investors.

From Financing Markets to Trust Markets: Hong Kong’s Choice

In the competition among global financial centers, Hong Kong’s core advantages have always been its rule of law, internationalization, and transparency. If its reputation suffers due to declining listing quality, the cost far exceeds any short-term financing gains.

A true international financial center is not where listings are easiest but where investors feel most confident investing. The enduring appeal of markets like New York and London across cycles owes much to their stringent post-listing supervision and mature investor protection mechanisms. To maintain its leading position in regional competition, Hong Kong must uphold its ‘quality baseline,’ even if it means some companies shift to other markets in the short term.

The series of measures introduced by the SFC this time send a clear message to global markets: Hong Kong will not compromise its standards for superficial prosperity. This commitment to quality may slow the pace of listings in the short term but will attract more reputable high-quality enterprises and long-term capital in the long run.

Editor/Melody