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Business
Print Edition> Business
UPDATED: March 19, 2007 NO.12 MAR.22, 2007
Where To List?
From Shanghai to Singapore, world markets offer Chinese companies more options than ever to raise funds
By ANITA ZUO
Share

The Singapore main board ranked second, and the third-ranked NASDAQ experienced a decrease in IPO numbers from seven in 2005 to six, with total funds decreasing from $719 million to $527 million.

"Since the globalization of the stock market, listing on the Hong Kong Stock Exchange and issuing globally available shares, which include selling shares to qualified U.S. investors, have become common practice," said Li Gangwei, Ernst & Young's Assurance and Advisory Business Service Partner and General Manager of China Operations and Development. "Looking forward to 2007, Hong Kong will remain the priority stock exchange center for Chinese enterprises looking to be listed overseas. Funds raised on the Hong Kong Stock Exchange will remain strong, and are predicted to reach HK$280 billion."

The number of Chinese enterprises being listed in Hong Kong is increasing, which is significantly enhancing the Hong Kong capital market. However, due to the fact that the Hong Kong Stock Exchange is "overly dependent on Chinese mainland IPO operations," according to Li Guobao, CEO of Bank of East Asia, the current situation could "threaten Hong Kong's position as a global financial center." Hong Kong did succeed in luring a number of large-scale IPOs, but has fallen behind other financial centers with respect to commodities and futures. If Hong Kong doesn't make immediate changes, it may lose a great deal of funds to more attractive overseas markets. In the next phase, the Hong Kong and Chinese mainland stock markets will be better integrated, which will directly benefit Hong Kong, as the Chinese mainland's rapid development is equally important as attracting mainland enterprises to list on the Hong Kong Stock Exchange.

Shanghai expected to trump Hong Kong

Overseas-listed Chinese mainland enterprises such as ICBC, Bank of China and China Life have been hotly pursued since they have a dual listing in China, and accordingly these "overseas returnee" companies have become an increasingly popular topic in the A-share market. Many overseas-listed enterprises have accelerated the pace of plans to participate in the return of H- share companies to China.

On January 9, Bank of Communica-tions convened its first non-regular shareholder meeting of 2007 to discuss and review eight proposals, including The Proposal Regarding Listing and the Release of A-shares. Ping An Insurance of China also hurriedly traveled the same path to list and release A-shares around the time of the Spring Festival. A recently released report from Changjiang Securities predicts that around 10 large-cap, blue-chip companies will enter the market this year, with the remaining entries being made up of "overseas returnee" firms.

A report on Hong Kong IPOs released by Ernst & Young predicted that in 2007, IPOs on the Shanghai stock market will be led by the H-shares of "overseas returnee" companies. And if these H-shares can rapidly return to the A-share market, then the IPO funds on the Shanghai Stock Exchange will leap from 146.3 billion yuan to 280 billion yuan. "Investment funds in Shanghai may trump Hong Kong; the last time this occurred was in 2001," said Li.

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