International board may trim reserves
By Maggie Zhang |
May 24, 2011, Tuesday
|
Print Edition
Print Edition
SHANGHAI'S soon-to-be-launched international board will help trim China's US$3 trillion foreign exchange reserves, the world's biggest, according to a market watcher yesterday.
"It doesn't matter whether the capital raised in Shanghai through the board is for domestic or overseas investment," said Terence Ho, an Ernst & Young partner. "In either case, it will help cut China's huge forex reserves."
If it's for domestic use, it won't create a forex inflow via foreign direct investments. If it's for overseas use, it will cut the current forex reserves as companies will have to exchange the yuan into foreign currencies, he explained.
"In either case, it's in line with China's monetary policy," said Ho.
But it is still unclear if the proceeds raised through the board will be allowed to invest overseas or domestically.
Speculation is mounting that the long-anticipated international board, which allows overseas companies to sell yuan-backed shares in China, may debut in the second half of this year.
"I think we can see the debut of the board within this year," Ho said, adding that the timing actually depends more on market conditions because all the technical details have been resolved.
Shang Fulin, chairman of the China Securities Regulatory Commission, said last week tthe international board is coming closer and closer.
HSBC and Standard Chartered Bank have told Shanghai Daily they aim to be among the first companies to list on the international board. Bank of East Asia, Procter & Gamble, Unilever and Royal Dutch Shell have also expressed an interest in a board listing.
NYSE Euronext is working with the Chinese government and Shanghai's bourse in the launch of the board.
"It doesn't matter whether the capital raised in Shanghai through the board is for domestic or overseas investment," said Terence Ho, an Ernst & Young partner. "In either case, it will help cut China's huge forex reserves."
If it's for domestic use, it won't create a forex inflow via foreign direct investments. If it's for overseas use, it will cut the current forex reserves as companies will have to exchange the yuan into foreign currencies, he explained.
"In either case, it's in line with China's monetary policy," said Ho.
But it is still unclear if the proceeds raised through the board will be allowed to invest overseas or domestically.
Speculation is mounting that the long-anticipated international board, which allows overseas companies to sell yuan-backed shares in China, may debut in the second half of this year.
"I think we can see the debut of the board within this year," Ho said, adding that the timing actually depends more on market conditions because all the technical details have been resolved.
Shang Fulin, chairman of the China Securities Regulatory Commission, said last week tthe international board is coming closer and closer.
HSBC and Standard Chartered Bank have told Shanghai Daily they aim to be among the first companies to list on the international board. Bank of East Asia, Procter & Gamble, Unilever and Royal Dutch Shell have also expressed an interest in a board listing.
NYSE Euronext is working with the Chinese government and Shanghai's bourse in the launch of the board.
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