National Committee Member Wang Dongsheng Advocates for Enhanced Greater Bay Area IPO Connectivity

With the National Two Sessions approaching, the review of the "16th Five-Year Plan" outline is a key agenda item receiving significant attention. In this inaugural year of the plan, Wang Dongsheng, a member of the National Committee of the Chinese People's Political Consultative Conference and Chairman of HSBC HOLDINGS in Hong Kong, has focused his proposals on further promoting deep integration within the Greater Bay Area and providing financial support for agricultural development. He also put forward suggestions on leveraging Hong Kong's strengths to serve the nation's broader development strategy.

Wang Dongsheng noted that the trend of mainland companies listing in Hong Kong remains strong, helping Hong Kong regain its position as the world's leading market for initial public offerings. Cross-border connectivity between the two markets continues to deepen. Last year, policies were introduced allowing eligible companies from the Greater Bay Area listed in Hong Kong to also list on the Shenzhen Stock Exchange, achieving two-way access for listing entities. He proposed that if investors from both Shenzhen and Hong Kong could simultaneously participate in new share offerings in each other's markets, creating a more comprehensive Greater Bay Area "New Share Connect" program, it would significantly enhance financial cooperation between Shenzhen and Hong Kong, improve the integration of the Greater Bay Area's financial markets, increase the inclusivity and adaptability of the domestic capital market system, and advance the internationalization of the Renminbi. Specific recommendations are as follows:

First, Investment Targets: During the pilot phase, A+H share listed companies could be included in the "New Share Connect." This would allow mainland investors to subscribe to new shares issued in Hong Kong by companies also listed on the A-share market, and permit Hong Kong local and international investors to subscribe to new shares issued in Shenzhen by Hong Kong-listed companies. As the pilot matures, the scope of eligible investment targets could be expanded to include pre-listed companies with a market capitalization exceeding 5 billion RMB or HKD. This requirement aligns with the existing Stock Connect schemes, facilitating continued trading of these shares via the Shenzhen-Hong Kong Stock Connect after the IPO.

Second, Eligible Investors: Following the Shenzhen-Hong Kong Stock Connect mechanism, Hong Kong local and international investors participating in mainland IPOs would need to meet the eligibility requirements set by the Hong Kong Stock Exchange. Mainland investors participating in Hong Kong IPOs would need to satisfy the suitability requirements for the Shenzhen-Hong Kong Stock Connect.

Third, Fund Arrangements and Shareholding Ratios: A closed-loop system should be implemented for investor funds. Regarding currency usage, investors and listing entities on the Shenzhen Stock Exchange could use Renminbi, while those on the Hong Kong Stock Exchange could use Hong Kong Dollars or offshore Renminbi. Given that new share issuances are not daily transactions, there is no need to set up a daily trading quota. Shareholding ratio requirements could follow the existing rules stipulated in the "Several Provisions on the Mutual Market Access between the Mainland and Hong Kong Stock Markets."