The long-awaited return of red-chip companies - mainland firms
which are registered and listed overseas - to the domestic stock
market could be within the next two months, a source close to the
securities watchdog said yesterday.
A draft rule to facilitate their entry is being discussed and
could be announced in late July or early August, an official with
the China Securities Regulatory Commission (CSRC), who did not want
to be named, told China Daily.
The China Securities Journal has reported that the rule
could be issued as early as this weekend.
The first batch of eligible red chips such as China Mobile and
CNOOC are expected to be listed on the A-share market "depending on
the market situation", the CSRC official said.
To qualify for the listing, according to the draft document, a
red chip's shares must have been traded on the Hong Kong stock
exchange for at least one year, have a market capitalization of
above HK$20 billion and a net profit of at least HK$2 billion over
three years.
The rule also requires a red chip company to have half of its
profit generated from its operating business on the mainland.
Based on Hong Kong stock exchange data at the end of May, 22 out
of the 93 red chips meet the requirements to list on the
mainland.
"Most of the big-cap red chips are State-owned enterprises
(SOEs) that have completed share-restructuring reforms, and this
makes it much easier for them to issue A shares on the mainland
under the Company Law," Kevin Shien, a partner of Deheng Law
Offices, said.
Since the securities reform of the mainland stock market,
Shanghai has seen H-share large-caps such as Bank of China and the
Industrial and Commercial Bank of China to list on the mainland. H
shares are companies registered on the mainland and listed on the
Hong Kong stock market.
The combined capitalization of SOEs and big financial firms now
accounts for 60 percent of the total market capitalization on the
Shanghai and Shenzhen bourses.
Liu Fuhua, a spokesman for the CSRC, said yesterday that the
securities watchdog is setting up a new division under the current
supervisory department overseeing listed companies to keep tabs on
listed SOEs and large financial companies.
(China Daily June 26, 2007)