The Shanghai government is vigorously promoting its new international board on the Shanghai Stock Exchange, which will be launched in the first half of next year, allowing foreign-invested enterprises to list in China.
Minister of Commerce Chen Deming noted in an address at the China International Fair for Investment and Trade held in Xiamen that work on qualified foreign-invested firms to be listed on the mainland should be promoted. The China Securities Regulatory Commission (CSRC) and the central bank are the main executive ministries for the establishment of the international board, and the Ministry of Commerce will become gradually involved. Practical implementation is on the agenda with the participation of the three ministries.
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In order to accelerate the building of its new financial center, Shanghai is stepping up the establishment of the international board. Shanghai's eagerness of for the international board matches that of Shenzhen for its recently launched Growth Enterprise Market (GEM).
Hong Kong-owned enterprises with close relationships to mainland markets are attaching great importance to the issue. Not long ago, HSBC Asia Pacific Chairman Vincent Cheng said that HSBC is discussing a listing in Shanghai with mainland authorities and everything is going well. It is said that HSBC has selected China International Finance Corporation and CITIC Securities as its mainland underwriters.
HK tycoon Li Ka-shing says Hutchison Whampoa is likely to list on the mainland if Shanghai develops into a financial center. Hong Kong media has recently reported that Henderson Real Estate and New World Development have also shown interest.
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The current average P/E on the A-share market is up to 22 times, compared with 12 times on the Hong Kong market, and A-shares seem more attractive from the premium level.
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In addition, Hong Kong enterprises value the capital accumulation capacity of the A-share market. Hong Kong firms can enhance their development if they conduct business and realize direct financing on the mainland, Chen Deming says.
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During a recent trip abroad by Chinese officials, foreign leaders expressed their desire to recommend their enterprises for China listing.
Hu Xiaolian, vice-governor of the central bank, points out that capital internationalization can be divided into two stages. One is the capital transaction stage, when foreign companies are allowed to list in China, and CSRC may consider further open trading after study and reaching a consensus with relevant departments. The next stage is the exchange, when the basic situation of the entire foreign exchange income and expenditure should be considered and matched to the upstream sector.