"China Mobile is likely to become the first overseas incorporated company to list in Shanghai through the CDR," said Wang Guoping, an analyst with China Galaxy Securities.

As China currently does not allow overseas-incorporated companies to directly issue A shares, the CDR would provide a channel for red chips to return to the stock market.

Though China Mobile has not yet disclosed its listing plan, analysts said the firm would return to the A-share market this year.

"Despite rumors that China Mobile might directly issue A shares, I believe it would be more feasible for them to issue CDRs," Wang said.

CDR to benefit all

The high expectation for the CDR goes beyond facilitating the return of red chips to their home market. The investment tool would open the door for foreign companies listed overseas to list in Shanghai.

"We hope the Chinese securities regulator introduces the tool as soon as possible, as it is a very good channel to link the Chinese capital market with the overseas market," said Raymond NG, a partner at Ernest & Young.

"With it, Chinese investors would be able to buy stocks issued by foreign companies."

The introduction of the CDR would not only benefit overseas-listed companies and domestic investors, but also domestic brokerages and banks.

"Brokerages could expand their businesses by underwriting and trading CDRs," said Cheng Weiqing, an analyst with CITIC Securities. "Banks could also share the profits from CDR issues."

But one analyst said the Chinese stock market was not ready for the CDR.

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