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Enoch Yiu

Move stirs up concern over more competition for Hong Kong
The  Shanghai Stock Exchange is stepping up efforts to attract multinationals to list on the mainland bourse.
Que Bo, assistant general manager of the Shanghai exchange, told delegates in a conference at the weekend that the bourse was  doing market research into the listing plan and would have some results soon.
'To strengthen the blue-chip market, we have been planning to allow the listing of such multinationals as HSBC Holdings, Coca-Cola and Siemens which have developed very well in China,' Mr Que was quoted  by Xinhua  as saying.
The news was welcomed  yesterday by a spokesman for  HSBC.
Hongkong and Shanghai Banking Corp executive director Peter Wong Tung-shun yesterday also welcomed the mainland move.
'HSBC would like to list in Shanghai in a bid to further show our commitment and to lift our brand awareness in mainland China,' Mr Wong said in a telephone interview.
The  comments, which are expected to increase pressure on Hong Kong,  are not new.
Several mainland officials  had  expressed the idea of allowing big foreign  firms to list  shares in  the domestic stock market  but the latest statement suggests  policymakers may be closer to launching the plan  to help mop up liquidity in the mainland's capital markets.
'By allowing multinationals to list their shares on local markets, China could solve the problem that right now there are far too many investors with excessive liquidity chasing just a few stocks,' said Ben Kwong Man-bun, the chief operating officer of KGI Asia.
'This is why the A-share market is overheated.'
Officials from HSBC,  Hang Seng Bank and Bank of East Asia  had earlier all  expressed a wish to list in  the mainland  to finance their  operations there.
Some analysts, meanwhile, have raised concerns that the listing plan could erode Hong Kong's status as an international fund-raising centre for the mainland.
The prospect of allowing foreign companies to list in Shanghai comes at a time when Hong Kong's new listing activities have slowed  this year as  Beijing encourages mainland firms to stay at home and list their shares on  the local bourses.
Some giant H shares listed in Hong Kong also issued A shares in Shanghai this year while certain red chips -  overseas-incorporated Chinese firms with mainland parents - would also return to list in the  domestic market within six months.
'It is inevitable that Hong Kong will have to face competitive pressure from the Shanghai Stock Exchange,' Mr Kwong said.
'However, since the yuan is not yet fully convertible and foreign investors cannot trade freely  in the mainland stock market, Hong Kong will still have a role to play to allow international investors to trade mainland stocks in Hong Kong.'
Low Chee Keong, an associate professor of corporate law at Chinese University, said the move was a good idea but he warned that  the absence of details suggested that the plan was not likely to be implemented soon.
'The mainland officials have yet to provide specific details on how to operate such a plan which raises a lot of legal and currency issues,' Mr Low said.
These included a range of issues such as whether  foreign companies to be listed in the domestic markets would be regulated by the mainland and whether they could take their funds out of China after raising  money from the market.
Carlson Tong Ka-shing, chairman of the listing committee of the stock exchange, said Hong Kong should seek a way to co-operate rather than compete with the Shanghai bourse for  international firms.
'Companies such as HSBC  and Hang Seng Bank have listed in Hong Kong,' Mr Tong said.
'Their listing in Shanghai would not affect Hong Kong's status but  would only widen their base of investors.
'Hong Kong should not only think of its  own interests but we  should work  on any development plan that can help the nation's capital market to develop.'



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