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BIZCHINA / Center
Return of red chips put off
By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-08-21 11:31
Red chip companies, or mainland firms registered and listed overseas, are
postponing their return to domestic stock markets, the Caijing Magazine
reported yesterday.
Related readings:
?Red chip companies may return home in August
?Way cleared for red-chip return
?China drafting rules to list red-chip firms - paper
?Shanghai exchange prepares to welcome red-chip trading
Wang Jianzhou, chairman of China Mobile Ltd, one of China's biggest
mobile communication carriers, said on August 16 when the company
announced its interim report, that the company has no timetable for
returning to the domestic market, citing complicated procedures.
Kong Qingping, chairman of China Overseas Land & Investment Ltd, a Hong
Kong-listed mainland firm, said the company will temporarily postpone
plans for A-share listing and hope to increase its land reserves in the
second half of this year.
"The postponement is due to laggard coordination with Hong Kong market
regulators," a source close to the matter said.
Currently, the Hong Kong and Shanghai stock markets are competing for
initial public offering (IPO) resources and Hong Kong's IPO market ranked
second in the world. But with bullish A-share markets, Hong Kong is
lusterless despite the fact that some companies listed in Hong Kong
raised more than US$1 billion in the first half of this year. Examples
include real estate developer Country Garden Holdings Company Limited and
footwear producer Belle International Holdings Limited.
In future, fewer private enterprises will go public in Hong Kong as
mainland assets are limited to listing overseas through holding companies
registered overseas.
In addition, the return of H-share and red chips is bad news for the Hong
Kong market. Market regulators have negotiated with mainland
counterparts, but the coordination was not smooth, so the return of red
chips was put off.
Some red chips are evading restrictions by issuing A shares through their
controlling companies or subsidiaries, insiders said.
China Overseas Land & Investment Ltd controlling company China State
Construction Engineering Corporation is making preparation for issuing A
shares.
"The operation is much more complicated that the return of red chips, but
this is the only way," an investment bank source said.
Statistics show that, by the end of July 31 this year, shares of a total
of 143 mainland companies were traded on Hong Kong. 100 of them are from
the main board and 43 from the Growth Enterprise Board, but only 42 of
those 143 companies issued A shares.
(For more biz stories, please visit Industry Updates)
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