UPDATE China Moving Ahead To Let Overseas Cos IPO

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Post time:2009-09-09Source:money.cnn.comAuthor:J.R. Wu and Victoria RuanEditor:jinxiaomei
China may be close to announcing rules that will allow overseas companies to list shares on the mainland, in a long anticipated move that would deepen the development of the country‘s stock market and pave the way for foreign companies to access flush yuan capital.

Comments offered Tuesday by China Commerce Minister Chen Deming and a senior investment banker at Citic Securities Co. (600030.SH), the country‘s top brokerage by market value, indicated regulators were moving ahead on issuing rules, but allowing actual listings could be some time off.

China will allow "qualified" foreign-invested enterprises to list shares domestically, the state-run Xinhua News Agency reported Chen as saying Tuesday at an investment and trade fair in the southeastern city of Xiamen. The report didn‘t offer further details.

Meanwhile, at a financial conference in Beijing, Ted Tokuchi,[link widoczny dla zalogowanych], managing director and head of investment banking at Citic Securities, said in a speech Tuesday that China may issue draft regulations on domestic listings by overseas companies after the weeklong National Day holiday next month.

China‘s National Day is Oct. 1, but the public holiday will last from Oct. 1- 8.

The draft rules should cover areas such as capital requirements, accounting rules,[link widoczny dla zalogowanych], corporate governance, and the remittance of funds raised from the IPO,[link widoczny dla zalogowanych], he said.

"If the stock market continues to improve, (the China Securities Regulatory Commission) will soon issue draft rules sometime after the October 1 holiday," Tokuchi said in his speech.

The securities regulator was making preparations earlier this year for overseas companies, including red chips, to list shares in Shanghai, Tokuchi said.

The rules would cover foreign companies and red chips, which are companies registered and listed overseas, typically Hong Kong, but whose assets are mostly in mainland China.

Tokuchi said two to three overseas companies, including red chips, are likely to list in Shanghai next year "if the stock market is okay."

He said about "five to six" overseas companies have already submitted applications to issue yuan-denominated A shares, including U.K.-listed HSBC Holdings PLC (HBC) and stock market operator NYSE Euronext (NYX).

He said regulators had originally planned to have a red chip company list in Shanghai before the end of this year,[link widoczny dla zalogowanych], "but due to the stock market situation, it may be delayed."

He didn‘t elaborate on what he meant by the stock market situation, but the bellwether Shanghai index is up about 60% so far this year. While it has only recently fallen off its year-to-date highs, concerns persist about asset bubbles inflating share prices from the flush liquidity underpinning the economy‘s recovery.

Many observers expect the first overseas companies to list on the mainland to be red chips. Red chips such as China Mobile Ltd. (0941.HK) and Lenovo Group Ltd. (LNVGY) have said they are keen to list in China,[link widoczny dla zalogowanych], as has Australian iron ore miner Fortescue Metals Group Ltd. (FMG.AU) .