Ordinary Investors Not Expected To Benefit From 1st International Board
By Lydia Chen |
May 30, 2011, Monday
|
Print Edition
Print Edition
INVESTOR response to the upcoming start of Chinese mainland's first international board for foreign equities has made it clear that those who will benefit most aren't the people who will fork out the cash to buy the new shares.
So who stands to gain?
First, of course, are the authorities.
With the launch of the new board, the overall market value of the mainland's stock markets is certain to skyrocket, lifting the prestige of exchange and regulatory officials.
Perhaps that is why Shang Fulin, chairman of the Chinese Securities Regulatory Commission and other senior officials of the top market supervisory body, have been making inspiring comments about the importance of the new bourse.
Since the new board will be in Shanghai, the city government and Shanghai Stock Exchange will also be basking in glory.
Shanghai's government has made it clear that it considers the board a vital step to help the city become a world financial center on par with London and New York by 2020. It also means the exchange will far outshine its main rival, the Shenzhen Stock Exchange, in southern China.
But writing on his Sina Weibo site, Zhou Jiangong, editor-in-chief of Forbes's Chinese website, said he and an unidentified China central bank official agree that the foreign board, which will list yuan-denominated foreign shares, is "totally unnecessary."
Zhou said the only benefit will be that officials will have another "political achievement" to crow about.
"The shares in the new board will all be traded in the yuan, and there's nothing different in the way of trading from any other A-share boards," he added.
"Does putting the word 'international' in the name really show how international your city is?" Zhou asked.
Another beneficiary will be the big foreign companies that list.
With price-to-earnings ratio set to be higher than those the companies enjoy on overseas exchanges, the initial public offerings may generate huge sums of money.
Laura May Lung Cha, former vice chairwoman of the CSRC and now the non-executive deputy chairwoman of HSBC Holdings plc, said at the Lujiazui Forum that her company is angling to become one of the first to list on the international board. HSBC Holdings aims to raise US$5 billion, she added.
HSBC Holdings said in February that its pretax profit in 2010 soared 169 percent to US$19 billion.
Brokers who underwrite the new listings will be another group to benefit from the new board, said Dong Le, an analyst with Haitong Securities said.
Small wonder that Li Jian'ge, chairman of China International Capital Corp, is one of the most die-hard fans of the new international board.
His company, China's top investment bank, is said to have been hired by HSBC to work with CITIC Securities, China's largest brokerage, to help underwrite the London-based bank's listing.
If HSBC achieves its fund-raising target, the two underwriters will earn more than 1 billion yuan (US$154 million) for their work.
Previous media reports said CICC, CITIC Securities, Galaxy Securities, BOC International (China) already have several listing deals in hand.
So who stands to gain?
First, of course, are the authorities.
With the launch of the new board, the overall market value of the mainland's stock markets is certain to skyrocket, lifting the prestige of exchange and regulatory officials.
Perhaps that is why Shang Fulin, chairman of the Chinese Securities Regulatory Commission and other senior officials of the top market supervisory body, have been making inspiring comments about the importance of the new bourse.
Since the new board will be in Shanghai, the city government and Shanghai Stock Exchange will also be basking in glory.
Shanghai's government has made it clear that it considers the board a vital step to help the city become a world financial center on par with London and New York by 2020. It also means the exchange will far outshine its main rival, the Shenzhen Stock Exchange, in southern China.
But writing on his Sina Weibo site, Zhou Jiangong, editor-in-chief of Forbes's Chinese website, said he and an unidentified China central bank official agree that the foreign board, which will list yuan-denominated foreign shares, is "totally unnecessary."
Zhou said the only benefit will be that officials will have another "political achievement" to crow about.
"The shares in the new board will all be traded in the yuan, and there's nothing different in the way of trading from any other A-share boards," he added.
"Does putting the word 'international' in the name really show how international your city is?" Zhou asked.
Another beneficiary will be the big foreign companies that list.
With price-to-earnings ratio set to be higher than those the companies enjoy on overseas exchanges, the initial public offerings may generate huge sums of money.
Laura May Lung Cha, former vice chairwoman of the CSRC and now the non-executive deputy chairwoman of HSBC Holdings plc, said at the Lujiazui Forum that her company is angling to become one of the first to list on the international board. HSBC Holdings aims to raise US$5 billion, she added.
HSBC Holdings said in February that its pretax profit in 2010 soared 169 percent to US$19 billion.
Brokers who underwrite the new listings will be another group to benefit from the new board, said Dong Le, an analyst with Haitong Securities said.
Small wonder that Li Jian'ge, chairman of China International Capital Corp, is one of the most die-hard fans of the new international board.
His company, China's top investment bank, is said to have been hired by HSBC to work with CITIC Securities, China's largest brokerage, to help underwrite the London-based bank's listing.
If HSBC achieves its fund-raising target, the two underwriters will earn more than 1 billion yuan (US$154 million) for their work.
Previous media reports said CICC, CITIC Securities, Galaxy Securities, BOC International (China) already have several listing deals in hand.
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