Speaking at the ongoing World Economic Forum in Davos, the Chief Executive at the Hong Kong Exchanges and Clearing (HKEX), Li Xiaojia explained that only firms that have shown consistency in their business models should consider going public in Hong Kong. His comments are seen as a no go for mining equipment firm Bitmain which is focusing on Artificial Intelligence after the slump in Bitcoin’s price.
Xiaojia’s explained this as he was swamped with questions from the media regarding the IPO application status of firms including Bitmain Technology, Ebang International Holdings, and Canaan Creative.
The China-based Bitmain Technology is the world’s biggest cryptocurrency mining rigs manufacturer. Ebang, and Canaan are not far behind, being the world’s top mining rigs companies.
The three companies had filed applications to go public in Hong Kong in 2018. However, the crypto market wipeout and the absent regulations around digital assets seem to have put their big plans on hold.
Speaking on the sidelines of the forum, Xiaojia did not specifically mention the case of the three mining firms. He, rather, elaborated on the broad principles for listing on the Hong Kong’s stock exchange.
According to Xiaojia,
“If a company made billions of US dollars through Business A, but suddenly said it will do Business B without showing any performance or said Business B is better, then I don’t think the Business A featured in their application will be sustainable. Besides, if regulators were hands off on Business A in the past but will regulate it in the future, will you be able to continue the business and still make money from it?”
It is interesting to note that Li’s comments run parallel with what the three Chinese mining equipment manufacturers are trying to do. Despite obtaining their major source of revenue from the mining business, these firms are now focusing their plans on the Artificial Intelligence industry owing to the ongoing slump in the crypto markets.
That’s not all, things don’t look very bright for these companies as their IPOs are to potentially stay in the limbo by the Hong Kong Exchanges and Clearing owing to lack of regulations in the industry.