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Curb on overseas listing of China firms urged

CHINA should restrict overseas listing of mainland enterprises to ensure the development of its B-share markets, says a senior official with the Office of Securities Commission under the Chinese State Council.

The remarks confirm earlier reports that Beijing is concerned that the rush for overseas listings would undermine the country's fledgling stock markets in Shanghai and Shenzhen.

Speaking at a conference attended by general managers from China's publicly listed companies, committee vice-director Ma Zhongzhi said the priority was to develop the B-share markets.

''There is no country in the world which does not place top priority on the development of its own national stock markets. Therefore we should restrict overseas listing to ensure the healthy development of our B-share markets,'' said Mr Ma.

There were two measures to improve the B-share markets, he said.

''The first one is to step up legislation and the second is to facilitate the convergence of our system with other markets in the world.'' He said Beijing would allow more companies to issue B shares this year to boost the development of B-share markets.

Beijing has approved a total of nine mainland companies for listing on the Hongkong Stock Exchange and many others are seeking listing in major financial centres such as New York.

Meanwhile, Mr Liu Hongru, chairman of the China Securities Supervision and Administration Committee (CSSAAC), also said the majority of mainland companies should be listed on domestic markets.

He added that Hongkong would be the first priority for mainland enterprises seeking overseas listing.

His remarks indicate that Beijing would not scrap the plan for the nine companies to be listed in the territory.

In an interview with China Securities, the official said that to attract overseas investment by issuing stocks was a more flexible way of collecting funds.

He said the experiment of issuing B shares for overseas investors, which started in 1991, was a success.

However, Mr Liu said that enterprises and projects involving state safety, defence technology as well as state monopoly products should still be managed by state-owned enterprises.

The state sector should be dominant in the fields of energy, communications and transportation, to which priority in state industrial policy have been given.