THE Hong Kong stock exchange faces increasing competition for listings once an agreement between securities authorities in China and Singapore has been struck by the end of this year. There are fears of an increasing number of China state-owned companies opting for primary listings in Singapore instead of Hong Kong. Tianjin Chinese Medicine, which was to be listed in Hong Kong, yesterday confirmed plans to issue shares on the Singapore exchange. A spokesman said the company was awaiting the release of a memorandum of understanding between the China Securities Regulatory Commission and its Singaporean counterpart allowing the listing of mainland firms. The pharmacy group, specialising in manufacturing and distributing traditional Chinese medicine, was undergoing a restructuring process as part of its listing preparation, he said. DBS Bank was expected to act as the lead underwriter. A DBS corporate finance source said details of the listing plan would not be finalised until the restructuring was finished. The group had yet to decide which of its arms would be included under the listing umbrella because there were various subsidiaries engaged in retailing, distribution and manufacturing business. The memorandum would clarify listing and trading regulations to be followed by mainland firms and investors alike. Problems in defining related-parties transactions and obtaining detailed track records of mainland companies would be resolved through the document. All state-owned enterprises in China are owned by the government and would be named under the same group of shareholders. According to common practices in the West, companies held by the same shareholders would be treated as related parties. The DBS source says a clearer definition of related parties is therefore needed before any Chinese state-owned firms can be listed. The memorandum would specify how far back track records required from China firms would go. It is still not known if the Singapore exchange will ask for company records going back three years, or stick to the more stringent five-year record imposed on companies already listed.