Chinese Firms To List Simultaneously On Hong Kong And China Bourses

by Mary Swire, Tax-news.com, Hong Kong

30 March 2005

It has been reported in the mainland’s media that financial regulators in China and the SAR are considering a move that will allow Chinese firms to launch initial public offerings simultaneously on domestic exchanges and in Hong Kong.

According to the China Business Weekly newspaper, the proposal has been drawn up in a bid to help stem the tide of mainland enterprises seeking to list on western exchanges in preference to China’s bourses.

The paper quoted Ren Guangming, Beijing chief representative of the Hong Kong Exchanges and Clearing, as saying that the move will “prevent the outflow of high-quality enterprises from the Chinese mainland.”

However, Ren conceded that differentials in stock prices between the two territories, with prices in China often much higher than Hong Kong, may affect a firm’s ability to issue shares on all bourses simultaneously.

On the other hand, analysts believe that regulators and investors may welcome the opportunity to observe the differences in IPO stock prices between Hong Kong and the mainland.

"When stock prices of a company with the same IPO price in Hong Kong and the mainland vary too much, mainland regulators and investors will have the opportunity to (see) the difference," noted Hou Liangzhi, chief analyst at Shanghai-based Everbright Securities Co.

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