'Cornerstone' Buyers Both a Boon, Bane for Hong Kong IPOs

(Hong Kong) — An impressive list of "cornerstones" was once seen as the key to attracting investors to Hong Kong initial public offerings (IPOs). But concerns are growing that this practice is distorting the prices of newly traded shares and reducing market liquidity.

Companies debuting in Hong Kong have increasingly relied on cornerstone investors — big institutional investors who agree to hold shares for a six-month lockup period to boost the newly listed companies' IPO performances and potential investor confidence. But these big shareholders tend to trade shares less frequently than other investors.