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China targets overseas-traded companies as IPO resumption looms
(Bloomberg)
Updated: 2006-02-10 11:23
The document suggested drafting separate rules to permit the sale of China
Depositary Receipts, or CDRs, by so-called "red chips," or Hong
Kong-incorporated companies that have their headquarters and operations in
mainland China.
China Mobile, the world's biggest cell-phone operator by users, and Lenovo
Group Ltd., which last year bought International Business Machines Corp.'s
personal computer business to become the world's third-biggest PC maker, are
among Chinese companies that sold shares through Hong Kong units.
Overcoming Hurdles
"Letting big red chips sell shares and list domestically is good for the
structural adjustment of the domestic securities market, and will enable
domestic investors to share the fruit of China's economic growth," the regulator
said in the document. CDRs would overcome the "legal hurdles" of overseas
companies selling shares in China, it said.
Mainland investors aren't allowed to buy shares in companies listed in Hong
Kong, a special administrative region of China that has its own currency and
legal system. Mainland-incorporated companies such as PetroChina, the nation's
biggest oil producer, also have sold stock in Hong Kong, known as "H shares."
China's government may lift the ban on domestic share sales in April or May
once companies accounting for 50 percent of the market's value have completed
their share conversion plans, Shanghai Stock Exchange Executive Vice President
Zhou Qinye said in an interview on Jan. 17.
'Good Companies' First
Zhou, who said "good-quality companies" should sell shares first, cited
PetroChina as a company that may list in Shanghai. He also named China
Construction Bank Corp., the nation's third- largest bank; Bank of
Communications Co., the fifth-largest lender; and China Shenhua Energy Co., the
biggest coal producer.
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