Lender to sell foreign-currency products that give mainland investors access to shares in overseas-listed Chinese firms Bank of China (BOC) will start the nationwide sale today of two foreign currency stock-linked wealth management products, the first schemes to give mainland citizens exposure to offshore-listed Chinese companies. The two are packaged as structured derivative products, hence circumventing a ban prohibiting mainland citizens and most of the country's companies from directly trading overseas-listed stocks. They will be put on the market as the steady flow of state giants going public internationally amid a domestic stock market slump is becoming an increasingly politically charged issue. One of the products is a two-year Hong Kong dollar scheme linked to a basket of large state-backed companies listed in Hong Kong. These are Sinopec Corp, PetroChina, CNOOC, China Mobile, China Unicom, China Telecom, BOC Hong Kong (Holdings), China Life Insurance, PICC Property and Casualty and Ping An Insurance. The product offers principal protection and a guaranteed 2 per cent annual return. Additional annual return will be based on the average returns of the stocks in the basket. Annual return will be capped at 8 per cent. The second product is a 15-month US dollar scheme linked to the FTSE Xinhua index of the largest 25 H-share and red-chip companies. Since the regulators freed domestic banks to trade derivatives for themselves and clients for hedging and profits in 2004, many have launched foreign currency wealth management schemes. But the two new products on offer from China's largest foreign exchange lender are the first to give mainlanders access to offshore-quoted stocks. 'We're selling the Chinese concept which is more receptive to domestic citizens,' Zhao Jianping, BOC's head of wealth management, said yesterday. Since 1993, 124 Chinese firms had raised a combined US$55.54 billion through public stock and convertible bond issues internationally by the end of last year, according to the China Securities Regulatory Commission. Prominent among them are the country's largest industrial and financial giants, few of which are quoted on the domestic stock market which was used more as a means to rescue troubled state companies in the years when listing quotas were tightly controlled by the government. China, which firmly controls its capital account, has allowed only a few large insurers to buy shares offered offshore by mainland firms. 'In the past, citizens could only see [the stellar performance] of those overseas-listed companies but could not invest in them,' Mr Zhao said. 'We are selling the concept of them genuinely sharing in China's economic growth.' The international flotation of the country's largest state-controlled lenders has evolved into a political issue since China Construction Bank and Bank of Communications, respectively the nation's third and fifth-largest lenders, started enjoying handsome capital gains after their Hong Kong listings last year. Complaints that such listings have mostly benefited foreigners have threatened to delay the upcoming offshore listings of BOC and the Industrial and Commercial Bank of China, respectively the country's No2 and No1 commercial lenders.