New World Development managing director Henry Cheng Kar-shun has confirmed that the property-to-infrastructure conglomerate is investigating the possibility of listing some mainland operations on either the Shanghai or Shenzhen stock market. 'We are doing some research on this subject following the announcement of new rules [for foreign-funded companies' mainland listings],' Mr Cheng said. He said the new guidelines gave foreign-funded companies a new fund-raising channel, but added New World had no immediate plan to issue A or B shares. Mr Cheng's comments came after reports that conglomerates such as New World and Cheung Kong (Holdings), were in talks with mainland investment banks on possibly spinning-off mainland operations that require yuan financing. Cheung Kong declined to comment yesterday. Last month, the foreign investment administration of the Ministry of Foreign Trade and Economic Co-operation (Moftec) said that a foreign-invested joint-stock limited company which met requirements would be allowed to issue A or B shares domestically. Three to four foreign-funded companies have been applying each month recently to become shareholding firms, as part of their preparations for mainland listings, according to a Moftec official. Analysts believe the trend will pose a threat to the capital market financing business in Hong Kong, as mainland firms with few foreign exchange needs will increasingly choose mainland markets which command higher valuations. They include state-owned enterprises and foreign-Sino joint ventures that previously have relied heavily on Hong Kong to raise foreign-currency funds, which then had to be partly exchanged into yuan for their yuan needs. Joe Zhang, head of China research at UBS Warburg, said: '[Fewer mainland] companies will come to Hong Kong in the long term . . . they have no reason to come.' However, analysts and investment bankers said it might take some time for foreign-funded companies to obtain approvals to issue shares in China. 'There are about 1,000 mainland companies waiting for China Securities and Regulatory Commission [CSRC] approval for launching initial public offerings [IPOs] in China,' Mr Zhang said. 'I don't expect [Beijing] to aggressively allow foreign companies to list.' Laurence Ang, head of China research at Deutsche Securities, said a report by Wen Wei Po newspaper yesterday that mainland IPOs would be suspended for at least one month following sharp plunges of stock markets, also implied delays in opening the market to foreign-funded firms. Although some B-share companies already have foreign strategic investors through share placements, so far no IPOs have been launched by foreign-funded mainland firms. 'It definitely has more to do with a regulatory barrier rather than the companies themselves,' said Jim Wong, an analyst at BNP Paribas Peregrine. A senior corporate finance manager at an investment bank that is arranging a few B-share listings said she believed Beijing was concerned about excessive outflow of foreign exchange through share placements by B-share candidates. 'Originally, it was expected that the CSRC would release formal rules on IPOs by foreign-funded companies by April, but so far that has not happened,' she said. To address the concern on foreign exchange losses, Moftec said the foreign shareholder of foreign-funded firms must retain at least a 25 per cent holding after listing.