Hong Kong's cornerstone investors dominate but drain IPOs of vitality

Hong Kong's cornerstone investors dominate but drain IPOs of vitality

A Chinese national flag flies in front of the China Construction Bank (CCB) Tower at Hong Kong's business Central district December 26, 2014. REUTERS/Tyrone Siu

Hong Kong has a deepening love affair with a system that allows major institutions or rich individuals to buy stakes in IPOs before the companies’ sell shares to the public but it may be undermining the vibrancy of the city’s stock market.

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