HSBC's office building in Shanghai. The IPO plan indicates the lender may focus more on emerging markets. [China Daily]
The much-anticipated launch of the Shanghai exchange's international board may still have to wait until June 2010, despite a foreign media report stating HSBC Holdings Plc may be floated on the local bourse as early as March next year.Sources close to the regulatory authority and investment banks downplayed the rumors yesterday.
According to the London-based Observer, HSBC is seeking to raise some 5 billion pounds ($8 billion) from the Shanghai listing and appointed China CITIC Securities, China International Capital Corp as the advisors for the offering, the newspaper reported yesterday. HSBC declined to comment.
Market watchers have generally cited the control of capital accounts and the non-convertibility of the yuan as the key obstacles for foreign firms planning to list in China.
The Shanghai IPO plan appears to be a key step in the bank's new strategy of focusing more on emerging markets, particularly Asia.
"It is definitely going to be a sizeable share sale, as the regulator tends to prefer multinational companies to list their entire business as a whole group, rather than merely the local arm, in the Shanghai Stock Exchange," a source close to the nation's top securities regulator said, declining to be named.
The source also said many of the fund raising plans were still under internal discussion and were not ready yet for regulatory approval.
The launch of the Shanghai international board is being widely watched as it would bring a string of leading international companies, including HSBC, Bank of East Asia, Coca- Cola and Wal-Mart Stores, as well as domestic red-chip firms like China Mobile and Lenovo to the domestic fund raising pool, which is considered a key step to make Shanghai an international financial center.
With regulators still working on the international board rules, investment banks involved in advising on the listing rules indicated it was too early to project when foreign companies would eventually be listed.
HSBC is among a number of foreign companies that has expressed a keen interest in listing on the Shanghai international board earlier this year. But a recent report from JP Morgan said HSBC may be navigating rough waters after the outbreak of the Dubai debt crisis and $17.03 billion in loans related to the United Arab Emirates in 2008. The report said Chinese authorities may not be keen on HSBC using funds raised in the Chinese market to plug a potential financial hole overseas.
However, Henry Cai, chairman of UBS Investment Banking, Asia, said multinational companies interested in listing in China usually don't put raising capital on top of their agenda.
"Indeed, these foreign companies take China as a key market and are willing to enhance its integration with the local market," Cai said in an interview. His company and several other foreign investment banks have held talks with Chinese securities authorities on mapping out the regulatory rules for the international board.
The international board is to be set up in the Shanghai Stock Exchange for wholly-foreign-invested companies to issue Chinese yuan-denominated shares.
