In order to encourage more Chinese enterprises to secure finance
in international capital markets, government departments are
currently discussing lowering the threshold for overseas listings,
Beijing-based Economic Information Daily quoted a
think-tank researcher as saying on Monday.
"As the economy maintains rapid and steady growth, Chinese
enterprises are eager to secure finance," said Zhang Hanya, vice
president of the China Investment Association and a researcher
under the National Development and Reform Commission. "A new round
of overseas listing has already been launched and will last for an
extended period."
There has been a hot debate on the advantages and disadvantages
of an overseas listing. Some have claimed that since high quality
Chinese enterprises go for an overseas listing, the domestic stock
market becomes weaker.
However, Zhang disagrees with this. He suggests that the
overseas listing of Chinese enterprises can be attributed to
simpler share issuance procedures, consideration of state-owned
enterprises reform and a welcome from foreign securities regulatory
commissions.
From January to September, 15 Chinese enterprises were listed
overseas. There are now 135 issuing 122.989 billion shares and
raising funds of US$72.972 billion. Among them 34 enterprises
launched initial public offerings on both the A-share market on the
Chinese mainland and H-share in Hong Kong; 101 in Hong Kong; 13
simultaneously in Hong Kong and New York; five simultaneously in
Hong Kong and London; and two in Singapore.
Han Ping, vice director of the International Cooperation
Department under the China Securities Regulatory Commission, noted
that the commission is now undertaking research on this subject and
will gradually accelerate the opening-up in capital markets. She
added that the Commission is revising related regulations and would
continuously support overseas financing.
The main regulations concerning overseas listing are Special
Provisions of the State Council on the Floatation and Listing
Abroad of Stocks by Limited Stock Companies, Mandatory
Provisions for the Articles of Association of the Company to Be
Listed Overseas, Notice Concerning An Enterprise's
Application for Overseas Listing and Guidelines on the
Vetting and Regulation of Applications for Listing on the GEM in
Hong Kong by Mainland Enterprises.
As for the threshold, Han said, "It will be discussed jointly
with other government departments."
Ren Guangming, chief representative of the Hong Kong Exchange in
Beijing, said the Exchange has become an important platform for
mainland enterprises to enter international capital markets.
Currently the number of mainland enterprises, half state owned and
half private, accounted for one third of the total.
The Sarbanes-Oxley Act, which took effect on July 15, has set
tougher accounting rules and raised related costs. To secure a
listing on the US stock market, a Chinese enterprise has to spend
US$5 million more than previously. Because of this, many have
started to look at European bourses. It is said that several
Chinese enterprises are now negotiating with Frankfurt Stock
Exchange for listing.
(China.org.cn by Tang Fuchun, November 10, 2006)