Zhejiang King Refrigeration Industry Co became the first overseas-funded firm listed on the Chinese mainland's A-share market, a sign that the mainland is ready to open its stock market to overseas companies.

Stock in the company ended up 22.19 per cent at 8.92 yuan (US$1.1) on its debut on the Shanghai stock exchange.

King Refrigeration, which is controlled by King Refrigeration Machinery Holdings Co, Taiwan's biggest maker of industrial central air conditioners, sold 40 million shares at 7.3 yuan (88 US cents) each in its initial public offering (IPO).

King Refrigeration is the first company to take advantage of guidelines approved by the Chinese Government in November 2001 that provide a legal basis for overseas-funded companies seeking a listing on the domestic market.

Experts believe the listing will become a milestone in the opening up of the Chinese mainland stock market. It has allowed foreign investors to buy into the market through a Qualified Foreign Institutional Investor scheme.

The introduction of more overseas companies is billed by the market as a key move to ensure the quality of listed firms, which are mostly State-owned with sometimes fraudulent information disclosure and poor performance, said Zuo Xiaolei with China Galaxy Securities.

The listing opens a way for overseas-funded firms to tap into the mainland's US$500 billion A share market, she said.

In April, Ningbo Tongmuo New Materials Co became the first company to gain approval from the examination board with the China Securities Regulatory Commission, followed by Hefei Rongshida Sanyo Electric Appliances Co. The two companies, both Japanese-controlled, are yet to get a final go-ahead.

Home appliance maker Tsann Kuen (China) Enterprise Co, in which Taiwan's EUPA Industry Corp holds a 29 per cent stake, sold foreign-currency-denominated B shares in 1993.

King Refrigeration was set up by its parent company and four Chinese mainland partners in 1993. The company made a 16.9 million yuan (US$2.04 million) profit in the first nine months on sales of 129.7 million yuan (US$15.7 million).

In the wake of the float, H. K. Chen, chairman of Taiwanese King Machinery Co, now owns 27 per cent of the company, down from 45 per cent.

(HK Edition 12/31/2003 page7)