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Hong Kong IPOs will fade further without exchange reforms

Today's growth companies have to be allowed to list with weighted voting rights

| Hong Kong, Macau
Alibaba Group Holding in 2014 chose the New York Stock Exchange for its initial public offering instead of Hong Kong due to regulatory obstacles.   © Reuters

Three years ago, the Stock Exchange of Hong Kong lost the chance to host the record $25 billion initial public offering of Alibaba Group Holding because regulators would not allow the company's founders certain privileges they regarded as contrary to the principle that all shares carry equal voting rights. If Hong Kong is to become competitive in attracting listings by high-tech and disruptive companies amid a general slowdown in IPOs on the exchange, a more flexible approach is called for.

Few regulatory issues have polarized the Hong Kong market like the listing of companies with weighted voting rights (WVRs). Such structures give founding shareholders voting rights disproportionate to their shareholding and financial stake, consolidating their control.

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