China plans greater share of IPOs

Unofficial policy seeks to encourage mainland firms to list on mainland exchanges.

    Citic Bank could raise up to $5.4bn
    via its IPO later this month [Reuters]

    The China Securities Regulatory Commission (CSRC) declined to comment, but one person close to the regulator was quoted as saying: "It is not publicly announced policy, but we are certainly encouraging Chinese companies to list on the domestic market."
     
    A spokeswoman for the Hong Kong stock exchange said it would not comment on press reports, but referred to recent remarks made by CSRC which had denied such plans.
     
    "CSRC had openly said that the Chinese regulators do encourage mainland companies coming to list in Hong Kong. Hong Kong is a major listing destination for the mainland enterprises," she said.
     
    A-shares and H-shares
     
    Shares for mainland companies listed on mainland stock exchanges are called A-shares, while shares of companies incorporated in mainland China but listed on the Hong Kong bourse are called H-shares.
     
    The "unofficial" policy intends to increase the number of A-shares by making companies list in Shanghai or Shenzhen, rather than Hong Kong.
     
    Policymakers in Beijing have grown concerned that Chinese investors cannot benefit from the growth of some of the mainland's fastest-growing companies if they are allowed to list solely in Hong Kong.
     
    Last year, initial public offerings (IPOs) in Hong Kong raised $44bn, while Shanghai made $15bn and Shenzhen $2bn.
     
    Overtaking Hong Kong
     
    But in January, PricewaterhouseCoopers predicted Chinese companies would raise $25bn via IPOs on mainland exchanges this year and some believe that the mainland bourses will overtake Hong Kong.
     
    Mainland exchanges saw a resurgence last year, with the benchmark index climbing 130 per cent and the rise is likely to have prompted Beijing's re-think over which companies to allow to list as H-shares.
     
    Citic Bank and China Pacific Insurance are among those planning multi-billion dollar listings in Hong Kong and Shanghai this year.
     
    Citic Bank, which could raise up to $5.4bn via its IPO according to a Reuters report, lists on 27 April.

    SOURCE: Agencies


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