Money

Shanghai, US to set int'l board rules

By Li Xiang (China Daily)
Updated: 2011-05-28 10:29

BEIJING - The valuations of the initial public offerings (IPO) of foreign companies on China's long-awaited international board are likely to be similar to the level in the markets in which they are already listed, said Duncan Niederauer, chief executive officer of NYSE Euronext, the parent company of the New York Stock Exchange (NYSE), on Friday.

The exchange is working closely with the Shanghai Stock Exchange in drafting the rules of the board, which will allow overseas companies to raise funds in the A-share market.

The regulator may not allow foreign companies seeking IPOs in the Chinese market to be priced at higher valuations at the time of the issuance, but their stocks may be traded at higher prices over time following the listing, Niederauer said at a news briefing in Beijing.

He said that the US exchange is also in discussions with the Shanghai bourse about the standards and requirements of companies listed on the international board.

"We've been encouraging the exchange to use a market model similar to the existing one at the Shanghai Stock Exchange," he said. "We are also focused on what the requirements for the listed companies will be after the issuance."

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Shang Fulin, the chairman of the China Securities Regulatory Commission, said last week that the country is moving "closer and closer" to the launch of the international board in Shanghai.

A number of foreign companies with extensive operations in China, including HSBC Holdings PLC and General Electric Co, have said that they are interested in floating shares on the Shanghai Stock Exchange.

NYSE Euronext has also expressed an interest in listing on the Chinese market but Niederauer said that there is no specific timetable for the listing.

Meanwhile, Niederauer said that the momentum of new Chinese listings in the US market will continue to be strong in 2011, despite the latest wave of investigations by the US securities regulator of Chinese companies listed on US bourses through reverse mergers.

Chinese Internet and social media companies are flocking to the US, with Renren Inc, Dangdang Inc and Youku.com Inc already having successfully listed in the country.

"It remains to be seen whether the fraudulent activities of some Chinese companies will have an impact on the overall level of issuance in the US market," said Niederauer. "But the US investors are more than sophisticated enough to understand the difference between a reverse merger and a company with a real business model."

In February, NYSE Euronext announced plans to merge with Germany's Deutsche Boerse in a deal that will create the world's largest trading group. Niederauer said that the merger will help the NYSE to substantially expand its footprint and business scope in Asia.