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HK Companies Possibly to Be Allowed to Get List in the Mainland
China Securities Regulatory Commission (CSRC) is now studying the feasibility of allowing Hong Kong-listed companies to issue China Depository Receipts (CDRs), said Zhou Xiaochuan, chairman of CSRC, after attending a seminar in Hong Kong.
This is the further evolution of all kinds of intentions of blue-chips, red-chips and Hong Kong-listed state-owned enterprises to seek listings in the mainland. Experts believe that if the plan is approved, it will be an important break through for China in the opening of its capital market.
Regarding the entry of foreign capital into the A-share market, Zhou once said CSRC is now studying introduced the qualified foreign institutional investors (QFII) system in hopes to channel foreign capital into the A-share market gradually and within limits. The concrete ideas include allowing foreign-funded enterprises to get listed on the A-share market. Experts said that CSRC is likely to choose the Hong Kong companies with Chinese funds background to get listed in the mainland, including red-chips, blue chips and state-owned enterprises in Hong Kong.
Zhou said if red-hips apply for listing on the A-share market in the mainland, related laws should be amended. According to the analysis of some overseas securities firms, the Company Law and the Securities Law are quite likely to be amended. After the amendment of the laws, not only red-chips, but also foreign companies will be allowed to issue A-shares. But industry insiders believe it will take quite some time to this big step forward. On the influence on the market, the listing of red-chips in the mainland will help to raise the overall asset quality of the listed companies in the mainland, and the internationalized operation of overseas companies will be conducive to promoting the enterprises in the mainland to get in line with international practice in management and capital operation. To the investors in the mainland, the issuance of innovative products, such as CDRs, will undoubtedly enrich investment products.
Industry insiders believe that with the global integration of finance and the merger or alignment of securities market, the cooperation of the securities market in Hong Kong, Shenzhen and Shanghai will get increasingly closer, and the cross-listings in the three places will become a trend.
Source: Panorama
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