industry

HSBC 'to become first foreign company to list in China with London-Shanghai stock connect'


Under draft rules, the scheme would allow Chinese companies to buy stocks indirectly through depositary receipts in London.

However, London-listed firms can initially only issue China depository receipts backed by existing shares, meaning they cannot raise funds through Shanghai listings.

HSBC has been in talks for around a decade to become the first foreign bank to sign up, the Financial Times reported.

Referring to HSBC, a person close to the matter said: “They have been trying to do this for years and this could be the time they succeed.”

An HSBC spokesman told Express.co.uk: “We are studying the proposed framework for the listing of Chinese Depositary Receipts under the Shanghai-London Stock Connect but cannot comment further at this time.”

Jason Lui, head of Asia Pacific equity derivative strategy at BNP Paribas, said of the stock connect plan: “It’s significant as this is the first time Chinese domestic investors can trade a foreign company in their own market through [CDRs].

“This is a way to test CDRs through this new channel because for onshore investors, the CDR is still a very new concept.”

While London-listed groups will not initially be able to raise capital, Mr Lui claimed one benefit would be “brand and marketing effect”.

The Shanghai Stock Exchange said the new connect would give domestic firms support in expanding their global businesses.

Mr Lui said: “China is fast becoming the biggest consumption market for many international companies.”

China’s securities regulator last month published draft rules for the long-awaited cross-border stock connect scheme, giving hope for investors of an imminent kick-off.

The China Securities Regulatory Commission (CSRC) said in the statement: “The provisions stipulate normative requirements for market entities as well as their activities under Shanghai-London Stock Connect, committed to the principles of protecting the legitimate interests and rights of investors, maintaining market order and containing financial risks.”

Huatai Securities, one of China’s largest brokerages, last month revealed plans to become the first Chinese company to list in London under the Shanghai-London stock connect.

The fundraising plan “shows Huatai’s ambitions to internationalise its businesses”, according to Zhou Ling, a fund manager with Shanghai Shiva Investment.

He continued: “With GDRs traded in London, Chinese companies are not only eyeing investors, but also seeking to hone their global images.”

The plans come following a turbulent year for Chinese shares, which have fallen about 30 per cent in 2018 so far.



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