Mainland, Hong Kong to promote stock co-op ( 2003-11-18 08:43) (China Daily)
The securities authorities of the Chinese mainland and the Hong Kong Special
Administrative Region will work closely together to encourage more mainland
enterprises to raise funds in the Hong Kong capital market, officials from both
sides said yesterday.
Hong Kong Exchanges
& Clearing Limited (HKEx) opens its representative office in Beijing
Monday afternoon. The establishment of the office is expected to improve
links between Hong Kong stock markets and mainland supervision bodies, and
facilitate communication between the HKEx and mainland enterprises wanting
to list. [newsphoto.com.cn]
Hong Kong will amend the regulatory system and expand the baseline so that
more mainland enterprises can list H shares, Andrew L T Sheng, chairman of the
Securities and Futures Commission (SFC) of Hong Kong, told a forum in Beijing
yesterday.
He was echoed by Shang Fulin, chairman of the China Securities Regulatory
Commission (CSRC), who said that CSRC would also enhance communication and
discussion with Hong Kong's securities regulators to provide a more favourable
environment for the overseas listing of mainland firms.
Co-operation between the two stock markets should reach a higher and broader
level, Shang said.
Sponsored by the Hong Kong Exchanges and Clearing Ltd (HKEx), the forum was
to review the fund-raising activities of mainland firms in the Hong Kong stock
market, the second biggest in Asia, over the past decade.
HKEx also inaugurated its representative office in Beijing yesterday, the
first it has set up on the mainland.
The opening of the office will enable HKEx to provide better information
services to mainland companies and help them get a better understanding of the
Hong Kong market, said Charles Y. K. Lee, chairman of HKEx.
It is also part of the efforts made by Hong Kong to facilitate the listing of
more mainland companies and shorten the time of such preparations, he said.
H shares are mainland-registered companies listed in Hong Kong. Since the
creation of the first H share, Tsingtao Beer, in June 1993, Hong Kong had
embraced 82 H shares by the end of September, 2003, which accounted for 8 per
cent of the overall number of listed companies in Hong Kong, HKEx sources said.
These H-share companies altogether raised US$20 billion from the Hong Kong
market. Their market capitalization took up 5 per cent of the market's total and
turnover at 17 per cent.
When Hong Kong helped these mainland companies get more foreign capital, it
also pushed them to upgrade management and accounting standards and increase
transparency, said Lee.
Meanwhile, for international investors, the platform also got them access to
the mainland companies. Such business opportunities have attracted a large group
of investment bankers, analysts and fund managers to Hong Kong, said Lee.
With the expected implementation of the Closer Economic Partnership
Arrangement next year, which will facilitate wider economic co-operation between
Hong Kong and the mainland, the two economies will further integrate, said Henry
Tang, financial secretary of the government of the Hong Kong Special
Administrative Region.
It also gives chance for the Hong Kong stock market and the Beijing office of
HKEx a new start, he said.
Meanwhile, for the mainland, such co-operation will also promote its economic
reform. Many State-owned enterprises (SOEs) are undergoing restructuring and
trying to adopt the shareholding structure. The sound legal framework and
investment environment in Hong Kong made it an ideal place for mainland
companies to learn and catch up, said Shang Fulin.
Even after they get listed overseas, mainland companies are still to enhance
corporate governance and efficiency and learn to keep good investor relation.
Experts also noted other problems that should be tackled. The large ratio of
State holdings in many listed companies, for example, should be changed
gradually.
Overseas listing, like H share, is not the ultimate target of the SOE reform,
said Xu Xiaonian, managing director of China International Capital Corporation
Ltd, a joint venture investment bank in China.
