London calling: Huatai Securities blazes trail for Chinese companies seeking to reach beyond New York and Hong Kong

The successful listing of Huatai’s global depository receipts in London help pave the way for dozens of other Chinese companies to reach international investors

London link to help further open China’s markets to the world

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Huatai Securities has opened a pathway beyond traditional overseas markets for Chinese companies seeking to reach international investors, analysts say. Photo: AP

Published: 2:30pm, 19 Jun 2019Updated: 10:24pm, 19 Jun 2019

The successful listing of Huatai Securities on the London Stock Exchange will encourage more Chinese companies to raise funds via the Shanghai-London link and align stock pricing with international practice, according to analysts.

The Nanjing, Jiangsu province-based brokerage has risen 7.3 per cent from its offer price after a second day of trade in London, after raising US$1.54 billion from selling global depository receipts. It was the first Chinese company to list depository receipts through the much-heralded programme linking the Shanghai Stock Exchange with the London bourse.

“It’s a successful listing as Huatai did raise money from international investors and the depository receipts fared well after the listing,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “It’s an important step the Chinese companies have made to go outside and more will follow suit.”

The Shanghai-London exchange link, which officially kicked off with the listing of Huatai Securities on Monday after being postponed in December, reflects a further opening of China’s stock market, the world’s second largest with a combined value of US$6.4 trillion.

The westbound channel, enabling global investors to buy into the global depository receipts of Chinese companies via London, has yet to get underway and the start date has not been publicly released. Photo: AFP

While investors from the mainland and overseas can directly trade a number of selected companies on both bourses under the stock connect programmes with Hong Kong, traders can only access depository receipts through the Shanghai-London link. At present only main board-listed companies on the two exchanges are included in the programme and able to offer the surrogate securities.