The securities authorities of the Chinese mainland and the Hong Kong Special Administrative Region will work closely together to encourage more mainland enterprises to raise funds in the Hong Kong capital market, officials from both sides said yesterday.

Hong Kong Exchanges & Clearing Limited (HKEx) opens its representative office in Beijing Monday afternoon. The establishment of the office is expected to improve links between Hong Kong stock markets and mainland supervision bodies, and facilitate communication between the HKEx and mainland enterprises wanting to list. [newsphoto.com.cn]

Hong Kong will amend the regulatory system and expand the baseline so that more mainland enterprises can list H shares, Andrew L T Sheng, chairman of the Securities and Futures Commission (SFC) of Hong Kong, told a forum in Beijing yesterday.

He was echoed by Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC), who said that CSRC would also enhance communication and discussion with Hong Kong's securities regulators to provide a more favourable environment for the overseas listing of mainland firms.

Co-operation between the two stock markets should reach a higher and broader level, Shang said.

Sponsored by the Hong Kong Exchanges and Clearing Ltd (HKEx), the forum was to review the fund-raising activities of mainland firms in the Hong Kong stock market, the second biggest in Asia, over the past decade.

HKEx also inaugurated its representative office in Beijing yesterday, the first it has set up on the mainland.

The opening of the office will enable HKEx to provide better information services to mainland companies and help them get a better understanding of the Hong Kong market, said Charles Y. K. Lee, chairman of HKEx.

It is also part of the efforts made by Hong Kong to facilitate the listing of more mainland companies and shorten the time of such preparations, he said.

H shares are mainland-registered companies listed in Hong Kong. Since the creation of the first H share, Tsingtao Beer, in June 1993, Hong Kong had embraced 82 H shares by the end of September, 2003, which accounted for 8 per cent of the overall number of listed companies in Hong Kong, HKEx sources said.

These H-share companies altogether raised US$20 billion from the Hong Kong market. Their market capitalization took up 5 per cent of the market's total and turnover at 17 per cent.

When Hong Kong helped these mainland companies get more foreign capital, it also pushed them to upgrade management and accounting standards and increase transparency, said Lee.

Meanwhile, for international investors, the platform also got them access to the mainland companies. Such business opportunities have attracted a large group of investment bankers, analysts and fund managers to Hong Kong, said Lee.

With the expected implementation of the Closer Economic Partnership Arrangement next year, which will facilitate wider economic co-operation between Hong Kong and the mainland, the two economies will further integrate, said Henry Tang, financial secretary of the government of the Hong Kong Special Administrative Region.

It also gives chance for the Hong Kong stock market and the Beijing office of HKEx a new start, he said.

Meanwhile, for the mainland, such co-operation will also promote its economic reform. Many State-owned enterprises (SOEs) are undergoing restructuring and trying to adopt the shareholding structure. The sound legal framework and investment environment in Hong Kong made it an ideal place for mainland companies to learn and catch up, said Shang Fulin.

Even after they get listed overseas, mainland companies are still to enhance corporate governance and efficiency and learn to keep good investor relation.

Experts also noted other problems that should be tackled. The large ratio of State holdings in many listed companies, for example, should be changed gradually.

Overseas listing, like H share, is not the ultimate target of the SOE reform, said Xu Xiaonian, managing director of China International Capital Corporation Ltd, a joint venture investment bank in China.

Close

Today's Top News		Top Business News
+Warning shot fired on Taiwan conspiracy ( 2003-11-18) +US visa hurdle turns students away from TOEFL ( 2003-11-18) +Miracle's ray of hope hits home ( 2003-11-18) +Chinese internet firms line up for IPOs ( 2003-11-18) +Shanghai gears up for baby boom ( 2003-11-18)		+BHP Billiton digs China ( 2003-11-18) +Sun inks deal to distribute Java Desktop System in China ( 2003-11-18) +Chinese internet firms line up for IPOs ( 2003-11-18) +CLP in US$240m Sichuan deal ( 2003-11-18) +US SEC questions China Life's offer ( 2003-11-18)