China plans to allow foreign companies to list on its fast-growing
stock markets as it pushes ahead with efforts to join the World
Trade Organisation (WTO), a press report said Sunday.
The Chinese government, due to announce guidelines on the plan
shortly, would initially accommodate only the stocks of
foreign-owned subsidiaries operating locally, Japan's leading
business daily Nihon Keizai Shimbun said.
But it would in future consider letting parent firms of foreign
capital list on the markets, in a way similar to the Tokyo Stock
Exchange's special section dedicated to shares in companies based
abroad, the report said.
Major firms in Japan, Europe and the United States were preparing
to have their units in China go public, possibly early next year,
the daily reported from Shanghai.
Anglo-Dutch consumer products giant Unilever NV and French
telecommunications equipment maker Alcatel have incorporated their
units in China as joint stock companies in a step to list them on
the local markets, it said.
US
photography giant Eastman Kodak Co., British bank HSBC and Hong
Kong's Bank of East Asia were preparing to follow suit as were
several Japanese companies, market sources said.
In
another move to boost the international presence of its capital
market, China also planned to open its A-share market, denominated
in the Chinese currency renminbi, or yuan, to foreign investors on
a gradual basis, the daily said.
China opened up its hard currency-denominated B-share market to
domestic investors last February.
The move was part of China's preparations to merge the A-share and
B-share markets in the future, the report added.
According to a draft of the listing guidelines, wholly
foreign-owned firms in China would be allowed to go public, the
report said.
It
added that they must retain at least 25 percent foreign ownership
if they are to be recognised as a foreign company and therefore
eligible for special tax treatment.
They could be listed either on the A-share or B-share markets, the
report said.
By
listing themselves, foreign companies would be able to procure the
Chinese currency at low costs and enhance their name-recognition in
China, the report said.
Raising yuan on the stock market was expected to be less expensive
for foreign firms than receiving bank loans.
The People's Bank of China has cut interest rates several times
since 1996 but the rates which foreign companies pay to borrow yuan
were about one percentage point higher than the interest on dollar
loans, a Japanese bank official said in the report.
China's stock markets, established in 1990, have been rapidly
growing.
The combined market value of the Shanghai and Shenzhen bourses
topped five trillion yuan (about 625 billion dollars) this year to
overtake that of the Hong Kong market, the report said.
Among stock markets in Asia, it ranks a distant second to the
market value of Tokyo bourse's first section worth more than 300
trillion yen (US$2.5 trillion).
(China
Daily 09/09/2001)