Cheung Kong (Holdings) Ltd’s planned HK$1 billion yuan-denominated REIT initial public offering (IPO) may miss its mid-April listing target pending Hong Kong regulators approval, according to a source.
Sources said that the territory’s securities regulator had returned with more questions during meetings on Monday, emphasising the regulator’s concern about dealing with untested instruments in the busiest IPO market in the world.
“No research reports will be sent out tonight,” said one source.
Before investment banks can provide research reports to potential investors ahead of premarketing, the Huixian REIT needs to secure an approval from Hong Kong’s Securities and Futures Commission (SFC).
The first of its kind in Hong Kong, the yuan-denominated REIT is expected to attract more retail investor interest with an annual payout rate of three to four percent, against the territory’s yuan deposit rates of 0.4 to 0.6 percent.
Faced with various hurdles that have to be sorted out before the yuan IPO’s successful listing and trading, brokers admit that their accounting and information systems are not yet ready for the new product.
After the success of the Hong Kong stock exchange’s simulation test on the yuan product, the market had been expecting the SFC to approve the REIT by Tuesday.
“Everything is still up in the air,” said Cheer Pearl Investment Ltd’s Chief Dealer Alfred Chan.
Some brokers are of the opinion that an April yuan REIT listing would be too early and could lead to chaos.
“It will be a bit of rush in April. June or July will be better,” commented Andes Lau, Prudential Brokerage’s Investment Manager.