Shanghai exchange to get a boost
The Chinese government has signalled a move that would make Shanghai stock market richer by about $30 billion and give credence to long-held suspicion that Shanghai is being consciously built up as a serious competitor to the well-entrenched market in Hong Kong.
The latest move involves giving permission to China Construction Bank to list at the Shanghai exchange to raise $8 billion. Lined up behind CCB for similar listings are "red chips" like PetroChina and China Mobile.
The listing by such "red chips" is expected to boost the market capitalisation of Shanghai by $30 billion, industry experts estimate. Analysts also believe that some foreign companies might eventually be tempted to list in Shanghai instead of the Hong Kong platform to be closer to product markets and please the levers of power in Beijing.
Companies based in the Chinese Mainland are responsible for nearly 70% of the market capitalisation in Hong Kong. Any move to encourage Hong Kong listed companies to go for a second listing in Shanghai is bound to impact its market, sources said.
For historical reasons, many of China's state-owned companies have been listed in Hong Kong and a few of them also went for secondary listing at exchanges in New York and London. These "red chips" are not traded in Chinese exchanges of Shanghai and Shenzhen. As China grew into a economic mammoth in recent years, the Hong Kong market emerged as the biggest beneficiary by providing Chinese companies with an international platform to raise funds.
This was resented by a section of the people and the political system, which felt that the local markets should be given an opportunity to grow in tandem with the country’s industrial development.
But the government found it extremely difficult to support the local markets as the stock index remained stagnant for four long years until it began to raise it head only last year.
This is when the government launched a “return of the prodigal” programme to persuade Hong Kong-listed Chinese companies to seek an additional listing in the home country. It began by pushing the Industrial and Commercial Bank of China, the nation’s largest bank, to go for an IPO in Hong Kong and Shanghai, simultaneously.
The IPO raised a world-record beating $19 billion with some $6 billion being contributed by investors in Shanghai.
There has been a lull until the announcement allowing CCB to go for an IPO. The bank would raise $8 billion if it manages to sell shares at current price of 87 cents ($0.87) a share, sources said.The Chinese government has signalled a move that would make Shanghai stock market richer by about $30 billion and give credence to long-held suspicion that Shanghai is being consciously built up as a serious competitor to the well-entrenched market in Hong Kong.
The latest move involves giving permission to China Construction Bank to list at the Shanghai exchange to raise $8 billion. Lined up behind CCB for similar listings are "red chips" like PetroChina and China Mobile.
The listing by such "red chips" is expected to boost the market capitalisation of Shanghai by $30 billion, industry experts estimate. Analysts also believe that some foreign companies might eventually be tempted to list in Shanghai instead of the Hong Kong platform to be closer to product markets and please the levers of power in Beijing.
Companies based in the Chinese Mainland are responsible for nearly 70% of the market capitalisation in Hong Kong. Any move to encourage Hong Kong listed companies to go for a second listing in Shanghai is bound to impact its market, sources said.
For historical reasons, many of China's state-owned companies have been listed in Hong Kong and a few of them also went for secondary listing at exchanges in New York and London. These "red chips" are not traded in Chinese exchanges of Shanghai and Shenzhen. As China grew into a economic mammoth in recent years, the Hong Kong market emerged as the biggest beneficiary by providing Chinese companies with an international platform to raise funds.
This was resented by a section of the people and the political system, which felt that the local markets should be given an opportunity to grow in tandem with the country’s industrial development.
But the government found it extremely difficult to support the local markets as the stock index remained stagnant for four long years until it began to raise it head only last year.
This is when the government launched a “return of the prodigal” programme to persuade Hong Kong-listed Chinese companies to seek an additional listing in the home country. It began by pushing the Industrial and Commercial Bank of China, the nation’s largest bank, to go for an IPO in Hong Kong and Shanghai, simultaneously.
The IPO raised a world-record beating $19 billion with some $6 billion being contributed by investors in Shanghai.
Link Times
