China’s Guotai Junan International seals deal with Sydney Stock Exchange
The Hong Kong unit of Chinese securities firm Guotai Junan International said it expects Chinese mainland corporations to list in Australia, after announcing a strategic cooperation agreement with the Sydney Stock Exchange.
Yim Fung, chairman of Guotai Junan International, said its corporate clients can now list on the Sydney Stock Exchange seamlessly, leveraging the extensive network and professional consulting capability of its holding company, AIMS Financial Group.
“We will establish the joint roadshow mechanism and develop mutual trading platforms following the cooperation agreement,” said Yim.
George Wang, deputy chairman of Sydney Stock Exchange, said he believes SSX will be an attractive initial public offering (IPO) destination for Chinese companies, especially those in the agriculture, resources and high-tech sectors, as these fit the interests of Australian investors.
“For Chinese mainland companies planning to list in the US market, Australia is another alternative,” added Wang.
But analysts believe it is “unnecessary” and “unreasonable” for mainland companies to list in Australia.
“The capital market in Australia is small and valuations are low,” said Hong Hao, managing director of BoCom International. “Australian investors show little interest in Chinese companies as they are concerned about the weak corporate governance in China.”
Daniel So, a strategist at CMB International Securities, also said he finds no reason for Chinese companies to list in Australia.
“Without knowing much about Chinese companies, Australian investors will not be interested in them,” So said. “Except some resources companies, I doubt who else will choose to list in Australia.”
It’s difficult for Chinese resources companies, mostly under government supervision, to go out, he added.
Even for resources corporations, Hong believes Shanghai and Hong Kong are far better listing destinations than Australia as the five Chinese companies currently listed in Sydney are not doing well.
The agreement between Guotai Junan International and the Sydney Stock Exchange comes at a time when Chinese investors are seeking more diverse investment channels amid the yuan’s volatility, said Guotai Junan International.
The security firm said the agreement will help it offer wealth management platforms for high net worth individual clients especially Chinese-Australians. But the company refused to elaborate on specific products.
