Budweiser APAC's IPO failure hurt retail investors, say newspaper adverts urging reform

Bright Smart Securities & Commodities

17/07/2019 07:48

By Felix Tam
    HONG KONG, July 17 (Reuters) - The dramatic failure of
brewer Budweiser APAC's $9.8 billion Hong Kong listing left "mom
and pop" investors badly out of pocket, a local broker has said
in an unusual series of full-page advertisements in newspapers
across the city on Wednesday. 
    Bright Smart Securities & Commodities Group Ltd  1428.HK 
urged bourse operator Hong Kong Exchanges and Clearing Ltd
(HKEX)  0388.HK  and regulator Securities and Futures Commission
(SFC) to reform the listing process.
    Retail investors accounted for 23% of trading in Hong Kong
last year, far higher than in other major markets such as New
York or London. They are also active participants in the city's
initial public offering (IPO) market.
    They typically borrow from their brokers to subscribe to
IPOs, using the shares they hope to obtain as collateral.
    Last Thursday, investors awaited the pricing of Budweiser
APAC shares in what would have been the world's largest IPO so
far this year. However, Belgian parent Anheuser Busch InBev NV
 ABI.BR  cancelled the pricing and called off the IPO the
following day.  urn:newsml:reuters.com:*:nL4N24D1CB
    Retail investors nevertheless had to pay interest on the
money they had borrowed to subscribe to the IPO.
    Calling off the IPO "made investors pay interest for no
reason," Bright Smart Securities said in its adverts. "If
another company shelves its IPO, that company should compensate
for paid interest to investors to ensure fairness."
    HKEX and the SFC declined to comment. A spokeswoman for
Budweiser APAC said subscriptions for the IPO were done in
accordance with local market practice.
    Local brokers are a significant force in Hong Kong because
of the high level of retail trading. They have a leading role in
electing the financial services representative who sits in the
city's Legislative Council - the current representative,
Christopher Cheung is chief executive and chairman of broker
Christfund Securities.
    While brokers have welcomed some reforms to Hong Kong's
securities market, they have actively opposed others. In 2012,
they took to the streets to protest against plans to shorten the
bourse's trading lunch break. (https://tinyurl.com/y6hvejx2)
    Bankers at multinationals and their advisers often privately
blame local brokers and retail investors for hindering reforms
in the city that would make the market operate more like its
U.S. rivals.
    While New York IPOs price one evening and begin trading the
next morning, Hong Kong deals require a settlement gap of five
working days because the system is still largely paper-based.
    Retail investors still file paper applications to subscribe
for shares and they pay in advance by cheque or cashier order. 
    Earlier this year the exchange said it was looking to
shorten the five-day cycle, and that it was working on a
paperless model for the securities market to help them to
achieve this.  urn:newsml:reuters.com:*:nL3N20N038  urn:newsml:reuters.com:*:nL3N1ZS3A4

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
AB InBev pulls Budweiser listing, cancelling year's largest IPO 
   urn:newsml:reuters.com:*:nL4N24D1CB
HKEX to woo listings from Asia-Pac firms, reform connect schemes
    urn:newsml:reuters.com:*:nL3N20N038
Hong Kong Exchange proposes paperless plan      urn:newsml:reuters.com:*:nL3N1ZS3A4
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Felix Tam; Additional reporting by Alun John and
Donny Kwok; Editing by Jennifer Hughes and Christopher Cushing)
 ((Alun.John@thomsonreuters.com; +852-28415827;))