"We're coming closer and closer to the international board," Shang Fulin, chairman of the China Securities Regulatory Commission, says during the 2011 Lujiazui Forum in Shanghai.
Although there is not a specific timetable for allowing IPOs of foreign firms in China, both Chinese and multinational securities agencies are preparing for the launch of the international board, which will allow foreign firms to list on the mainland for the first time.
"We're coming closer and closer to the international board," Shang Fulin, chairman of the China Securities Regulatory Commission, said during the 2011 Lujiazui Forum in Shanghai.
Domestic brokerage firms, such as China International Capital Corporation Limited (CICC) and CITIC Securities, have set up special working groups to contact those who are interested in listing on the international board. Multinational securities agencies have also started their marketing campaigns.
"The launch of the international board will directly boost the revenue of securities and broker sectors," an analyst told Securities Daily.
The news has attracted the attention of many foreign enterprises. Business leaders say they hope to sell shares publicly in China soon.
At the 2011 Lujiazui Forum, HSBC China President and CEO Helen Wong said HSBC will aspire to become the first foreign bank to be listed in the country. Peter Wong, executive director for Asia Pacific of HSBC, echoed that sentiment, saying the company is ready for a China listing. HSBC has hired CICC and Citic Securities Co. to help arrange its IPO.
Additionally, Standard Chartered Bank, Bank of East Asia and Australia & New Zealand Banking have also shown strong interest in an IPO in Shanghai.
Apart from foreign banks, many large international companies such as Reuters, Volkswagen and Coca-Cola, also confirmed that they are interested in listing in China.
The NYSE Euronext is working with China and the Shanghai Stock Exchange to prepare for the launch of the international board, said Ronald Kent, executive vice president of the NYSE Euronext.
Many foreign companies have large scale business interests in China. For many firms, China is now both a major production base and consumer market.
"A local listing would boost their brand awareness in China. It would also help foreign firms motivate employees with stock options and seek funds," said Chris Lu, CEO of Deloitte China.
In addition, companies who have committed to long-term development in China need to sell shares locally to boost fund raising efforts, said Tang Zhigang, an analyst with UBS Securities.
Apart from those foreign institutions, red chip companies, or firms who are incorporated outside Chinese mainland, are expected to be allowed to list on the international board. Under current regulations, red chip companies are generally not allowed to trade on Chinese A-share market on the Shanghai Stock Exchange or the Shenzhen Stock Exchange, although they do trade in Hong Kong.
Currently there are 98 red chip companies listed on Hong Kong's main board, 28 of them with market value of more than 20 billion HKD.
Large international companies, Hang Seng Index listed enterprises and red chip companies are all candidates for a Shanghai IPO, according to a UBS report authored by Tang.
