HK to limit retail investor access to SPACs

Retail investors accounted for about 20% of all trading in Hong Kong in 2019, according to last year's HKEX survey.

Hong Kong will propose limiting access to retail investors to buy and trade companies as the city prepares to roll out a framework this month.

An anonymous source said that Hong Kong will only allow professional investors with assets of more than $128,543.50 (HK$1m) to participate in both the primary and secondary market of special purpose acquisition companies (SPACs). Public consultation for the framework will be held this month, meeting the timeline announced by the city's financial secretary.

"We are always looking for ways to enhance our listing framework, striking the right balance between delivering appropriate investor protections, market quality, and market attractiveness," a spokesperson for Hong Kong Exchanges and Clearing (HKEX) said in an email to Bloomberg. "HKEX is continuing to evaluate the feasibility of a Hong Kong SPAC framework, and we look forward to consulting the market on this in due course."

Professional investors are individuals with a portfolio of at least $1m (HK$8m), including stocks, bonds, bank deposits, and cash. They are deemed more sophisticated and can be exposed to more complex and risky products without the same level of protection as retail investors.