Foolish Pru! You picked the wrong Asian secondary listing. For Monday has brought yet more news of the Shanghai Stock Exchange’s bid for complete world domination. (Quaking in your boots yet, Hong Kong?)
Specifically, SSE head Geng Liang has unveiled draft rules for his exchange’s long-promised international board, Reuters reported on Monday.
This will allow overseas companies to get listed on the mainland at long last, and issue renminbi-denominated shares. That promises to be quite an IPO bonanza, after a fallow period. An Asian Big Bang, even?
Via Reuters:
The draft rules are subject to change and public opinion will be sought in due course, but there’s no official timetable for the launch of the new board, Geng told a news briefing on the sidelines of the National People’s Congress in Beijing.
“The Shanghai Stock Exchange aims to become a market for both domestic and overseas blue-chips,” Geng said. “The new board would also help Shanghai become an international financial center.”
China plans to allow foreign companies to sell shares publicly in Shanghai as soon as this year, part of efforts to reregulate its capital markets and broaden investment channels for domestic investors.
This comes on top of Chairman Geng’s previous announcement that the SSE will host overseas-indexed ETFs in the near future. An exact timetable is similarly lacking, but you can’t fault Geng for ambition.
So, will the Hang Seng suffer relative to a booming SSE? Fang Fang, JP Morgan’s vice-chair of Asian investment banking, told the HK Standard he doesn’t think so:
“I don’t think there will be a competitive relationship between it and the Hong Kong [stock] exchange,” he said, adding that after the launch, mainland funds will drive most of the trading.
“Hong Kong is more like an independent third party offering a trading market. Their relationship could be complementary.”
Hmm.
FT Alphaville has recently noted that Hong Kong is already looking to benefit from some integration with the mainland, like allowing HK corporations to use renminbi to denominate their debts.
But that’s a very niche future. The mainland is catching up with it in equities innovation all the time now – including more flexible IPO rules, just in time for the SSE’s big moment.
To top it all off, China Daily reported that Shanghai exceeded Hong Kong in GDP in 2009, although that comes with the usual health warning about Chinese statistics. By 2014 there’ll even be duelling Disneylands. Play on, Asian exchanges. Play on.
Related links:
Releasing the renminbi for Asia – FT Alphaville
Shanghai surprise, Tokyo nightmare – FT Alphaville