CSRC eases rules to help firms return for home listings

The mainland's securities regulator said it would make it faster for overseas-listed local firms to return to the home market by streamlining procedures as well as encouraging a domestic venture capital market.

The move will mean more quality mainland firms for domestic investors to choose from as many big Chinese companies - such as PetroChina, CNOOC and Ping An Insurance (Group) - opted to list on overseas markets when they sold shares for the first time.

'The regulator is trying to bring more listings in the mainland market by improving the current policy,' said Enrique Xiao, an analyst with research firm Zero2IPO.

Mainland companies raised more funds in Hong Kong than in the domestic market over the past two years.

Last year, mainland companies raised US$44 billion from eight overseas markets including Hong Kong, almost triple the amount raised in the domestic market, according to Zero2IPO.

A recent research report by the China Securities Regulatory Commission said such a trend would curb the asset growth and competitiveness of the local capital market.

Cheng Siwei, a vice-chairman of the National People's Congress, last week said that only 30 per cent of listed firms in the mainland were worth investing in while the rest offered little or no value.

To encourage local listings, sources earlier said the regulator had been slowing approvals for mainland companies selling shares overseas.

The CSRC yesterday said that it would further improve procedures for dual listing in the mainland and Hong Kong market. Industrial and Commercial Bank of China listed shares simultaneously in the two markets last year while China Citic Bank also has similar plans this year.

The CSRC would also gradually relax a requirement that all listing candidates must submit documents and seek approval from the regulator. Eventually, it hopes to leave most procedures to the exchanges, so companies need to register only with the CSRC for a listing.

The regulator also said the shortage of local venture capital funds would push local firms to list overseas. 'Currently, the most active venture capital funds are foreign-owned which leads to the overseas red-chip listings,' the report said.

Mainland companies controlled by foreign private funds are regarded as red chips when seeking a listing overseas and will have to seek more approvals as well as an automatic lock-up period when selling shares in the mainland.

CSRC also said that it would find a more effective way to regulate the foreign capital investing in mainland equities. Currently, several regulatory bodies are involved in supervising investment by venture capital funds.