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China to back ‘qualified’ foreign firms for listing on domestic markets
Government says foreign-funded companies would be aided in domestic listings, as well as mergers and acquisitions
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Zhang Shidongin Shanghai
China will support qualified foreign-invested companies to list on its onshore stock markets, as part of a sweeping move by Beijing to further open up its mainland capital market and lure foreign direct investment back to the world’s second-largest economy.
The mainland’s stock exchanges will optimise communication services with companies seeking to list before they file applications, according to a circular jointly released by three government agencies, the Ministry of Finance, the Ministry of Commerce and the National Development and Reform Commission.
The move is the latest step in Beijing’s long-running campaign to reform China’s US$12 trillion stock market, where listings remain dominated by domestically domiciled companies.
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Currently, only a handful of companies with foreign ownership trade on China’s onshore exchanges, such as Foxconn Industrial Internet and cooking utensil maker Zhejiang Supor.
Greater participation by foreign-controlled companies in China’s domestic equity market could help draw fresh overseas capital, as many global investors remained underweight yuan-denominated stocks following the Covid-19 pandemic, analysts said.
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Efforts to reform China’s capital markets and internationalise the Chinese currency have gathered pace recently. The circular came just days after Hong Kong authorities said that the city would launch Chinese government-bond futures trading in August, in a move investors said would promote the use of the yuan overseas. In April, mainland China’s financial regulators scrapped the restrictions on foreign investors trading the nation’s onshore sovereign-bond futures.
Select foreign equity-investment firms would be allowed to participate in domestic stock offerings as strategic investors, the circular said. Regulations would also be revised to encourage mergers and acquisitions (M&As) involving foreign and domestic firms, while streamlining management procedures and strengthening co-ordination across government departments, it said.
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