The State Administration of Foreign Exchange is requiring Chinese cornerstone investors to submit requests for approval if they want to buy substantial sums of Hong Kong currency for IPO investments in the city, reports Bloomberg, citing sources who asked not to be identified.
The review criteria is still unclear and that there is no guarantee the applications will be approved though, says Bloomberg. Cornerstone investors have had trouble getting their money across the border, delaying some HK IPOs. Bloomberg says that in February, China Zheshang Bank Co. postponed gauging demand for its Hong Kong initial public offering after some potential cornerstone investors reported difficulty moving money out of mainland China.
Hong Kong IPOs have raised $21.7 billion this year, down from $25.8 billion during the same period in 2015, according to data compiled by Bloomberg.
The six Chinese lenders that went public in Hong Kong during the last 12 months relied on mainland Chinese cornerstone investors to buy an average 53 percent of their offerings, according to Bloomberg data.