# Song Xiangqian Criticizes Hong Kong IPO Market Distortion > Hong Kong's IPO market distorts pricing through debt-like structures, warns Jiahua Capital CEO. - Title: Song Xiangqian Criticizes Hong Kong IPO Market Distortion - Summary: Hong Kong's IPO market distorts pricing through debt-like structures, warns Jiahua Capital CEO. Hong Kong's IPO market uses debt-like structures to distort… - Keywords: jiahua capital, song xiangqian, hong kong stock exchange, securities and futures commission, equity in name debt in substance, initial public offering, price discovery mechanism, ipo pricing distortion, finance, markets, Song, Xiangqian - Source: BigGo Finance — https://finance.biggo.com/news/6c9886b5-4fd1-4ea1-a6c9-39d963995d27 - Author: BigGo Finance - Published: 2026-10-14T05:06:03+00:00 - Read time: 1 min - Topics: jiahua capital, song xiangqian, hong kong stock exchange, securities and futures commission, equity in name debt in substance, initial public offering, price discovery mechanism, ipo pricing distortion, finance, markets ## Jiahua Capital CEO Criticizes Hong Kong IPO Market Jiahua Capital CEO Song Xiangqian publicly criticized Hong Kong's long-standing 'equity in name, debt in substance' phenomenon in IPOs. > Jiahua Capital CEO Song Xiangqian has publicly criticized the long-standing "equity in name, debt in substance" phenomenon in Hong Kong's initial public offering (IPO) market ## Hidden Debt Structures Distort IPO Pricing Repurchase commitments, guaranteed returns, and shortfall top-ups transform equity investments into debt-like instruments. > hidden arrangements such as repurchase commitments guaranteed returns and shortfall top ups have transformed equity investments into debt like instruments ## Price Discovery Mechanism Fundamentally Distorted IPO pricing mechanisms are replaced by pre-arranged capital structures and implicit return guarantees. > the ipo pricing mechanism which should be formed through full competition and independent investment judgment is to a certain extent being replaced by pre arranged capital structures ## Systemic Risks in Hong Kong's IPO Market Failure of price discovery, damaged investor trust, weakened company quality, and eroded international competitiveness. > the far reaching impact of this problem extends well beyond the post listing share price performance of individual companies ## Regulators Introduce IPO Reforms Hong Kong SFC announces amendments to Securities and Futures (Stock Market Listing) Rules effective Q1 2027. > the hong kong securities and futures commission sfc announced on october 12 amendments to the securities and futures stock market listing rules ## New Post-Listing Conditions for Companies SFC can impose conditions on listed issuers to protect investors and ensure market integrity. > the amendments add new section 7a allowing the sfc to impose post listing conditions on listed issuers ## Targeted Regulatory Measures for Suspicious Applications SFC can require compliance with disclosure conditions for applications with suspicious but non-objectionable features. > the most significant change is the addition of new section 6 3b which expressly provides for the imposition of conditions on listing applicants that continue to apply at and after listing ## SFC Consultation on Market Reforms SFC received 16 industry submissions on proposed IPO rule amendments by May 2025. > the sfc had issued a consultation paper as early as march 28 2025 and by the time the consultation closed on may 23 2025 it had received 16 industry submissions ## Hong Kong's IPO Regulatory Evolution SFC and HK Stock Exchange launch reforms to improve market system and reduce compliance costs. > the sfc and the hong kong stock exchange have already launched the second phase of consultation on enhancing the competitiveness of the listing regime in the third quarter of this year ## Specialist Technology Companies Listing Rules HK Stock Exchange to review market cap threshold for Specialist Technology Companies in 2027. > the hong kong stock exchange will launch consultation in the first half of 2027 on revising the listing regime for specialist technology companies chapter 18c ## Market Quality Over Fundraising Scale Hong Kong's capital market should prioritize pricing efficiency and quality over fundraising volume. > the future of hong kong's capital market should not be measured solely by fundraising scale but should be jointly defined by its pricing efficiency market depth listed company quality and long term investment returns ## Systemic Risk to Hong Kong's Financial Reputation Distorted IPO pricing threatens Hong Kong's international competitiveness and long-term capital appeal. > he warned that if left unchecked the practice would produce distorted price signals harm investor interests weaken the quality of listed companies and ultimately erode hong kong's international competitiveness and long term capital appeal ## Key takeaway Hong Kong's IPO market uses debt-like structures to distort pricing, risking investor trust and market credibility.