Cheering at the new incentives issued by the securities industry's watchdog, overseas-invested companies are expected to speed up their pace to debut for a long-anticipated listing on China's stock market.
In a circular issued last week, the China Securities Regulatory Commission (CSRC) announced a series of rules governing the information disclosure of companies seeking public offerings on the equities market.
The commission also incorporated specific regulations governing the prospectus of overseas-invested companies when seeking a listing on the domestic bourses, further clarifying the procedures and requirements for these overseas-funded candidates.
Sources from the investment banking divisions of Guotai J & A, Shenyin & Wanguo and Southern Securities -- three leading local securities underwriters -- said several overseas-funded companies had already filed documents to the CSRC, and some of them have already entered the coaching period.
The list includes Anglo-Dutch homeware maker Unilever, French tyre maker Michelin, Taiwan-based food giants Tinghsin and President, British-based Hongkong and Shanghai Banking Corp and Hong Kong-based East Asia Bank, according to insiders.
Some underwriters revealed that an overseas-funded company is expected to complete the coaching period before the end of the month and to launch its initial public offering on the A-share market by mid-year. The company, insiders predicted, is probably a Taiwan-based one.
Teng Hongnian, a public relations official with the Hong Kong-listed Tinghsin, told Business Weekly that the group has already been in talks with an accounting firm, legal consulting firm and underwriter.
As to when the group will be listed on the A-share market, he said the timing depends on the restructuring process, and the group also needs to wait for relevant rules to be released and the approval of the CSRC.
The new rules are widely seen as a follow-up to the guidelines jointly released by the CSRC and the Ministry of Foreign Trade and Economic Cooperation last November.
The guidelines mapped out a legal basis for overseas-funded companies seeking a listing either on the domestic yuan-denominated A-share or the foreign currency-denominated B-share markets.
More follow-up rules will come to regulate the listing of overseas-invested companies, Wang Yuanhong, a senior expert with the State Information Centre, told Business Weekly.
The market regulator's welcoming message has received warm applause from overseas companies which are keen to seek a high profile in China's securities market in a bid to raise capital or promote their brand names.
A recent survey conducted by accounting firm Deloitte Touche Tohmatsu indicates that one-tenth of the 680 surveyed overseas-funded companies have plans to restructure their businesses in China and seek a listing on China's markets, most of which are telecoms and financial companies.
But the nation's securities market so far has kept its doors closed to solely foreign-funded companies and joint ventures with foreign sides taking a controlling stake.
On the pending debut of overseas-funded companies on the domestic markets, some experts expressed concerns that overseas-funded companies might divert large pools of funds from their domestic counterparts.
Wang said: "If overseas-invested companies swarm into China's securities market during a short period of time, the market will be deeply affected and even fall short of capital."
But he ruled out the possibility that overseas-funded companies might flood the domestic bourses in the near future.
Yan Bin, an analyst with Beijing Securities, told Business Weekly that she is not worried about whether overseas-funded companies absorbing huge sums of capital from what was originally invested in domestic enterprises.
"With high-quality overseas-funded companies venturing into the stock market, Chinese investors will be willing to put more capital into securities assets," she said.
But both experts reached a consensus that overseas-funded companies' listing on China's market will help streamline the market and shore up the structure of the listed companies.
"The entry of overseas-invested companies into China's stock market will help standardize the information disclosure system and better protect the investors' interests -- thanks to their advanced accounting mechanisms and internationally accepted practices," said Wang.
Currently, most of the listed companies on the market are large State-owned enterprises.
"These reputed companies are also expected to boost investors' confidence dampened by a string of market scandals last year," added Yan.
Irrational shareholding structures and malpractice of some listed companies have badly hampered the development of China's securities market.
( April 19, 2002)
