International board to become "pool" for hot money hedging

14:53, November 30, 2010      

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The central bank hopes the Shanghai Stock Exchange will move as quickly as possible to launch an international board, People's Bank of China's vice governor Ma Delun disclosed on Nov. 29.

The international board will allow offshore companies to sell shares denominated in Chinese currency and explore the possibility for overseas companies and red chip firms to issue yuan-denominated bonds and other debt instruments. Experts believe this might help hedge against hot money.

Last Saturday, Yao Gang, vice chairman of the China Securities Regulatory Commission, said that the commission is accelerating the study on promoting the construction of the international board.

Zhou Xiaochuan, governor of the People's Bank of China, recently put forth the idea to construct a "pool" to manage hot money during the annual financial meeting. Afterwards, this was interpreted as constructing a series of policy measures to manage hot money, including foreign exchange management of capital inflows and raising the deposit-reserve ratio.

Some experts pointed out that in addition to quantity tools such as raising the deposit-reserve ratio, the bond market and the stock market are also a kind of means, and the international board can also be used as a "pool."

Ma believes the introduction of the international board has its market demand and industry demand which are no longer potential, but real. The securities commission, as a regulator, has also noticed this and is actively promoting the international board.

Yao said that the construction of the international board is an important step in the internationalization of China's domestic capital market. It allows overseas enterprises, including enterprises like China Mobile that do business on the Chinese mainland but are registered and listed in Hong Kong, to issue yuan-denominated stocks in China's domestic exchanges.

Currently, the securities commission is accelerating the study on promoting the international board. According to sources, overseas enterprises that are interested in the international board include HSBC Holdings, the New York Stock Exchange and Siemens. Underwriters such as CITIC Securities and China International Capital Corporation are now providing consulting services for some enterprises who are preparing to land the international board.

By People's Daily Online

(Editor:祁澍文)

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