Shanghai-London Stock Connect debut enables foreign companies to list in Chinese stock market
Jun 18, 2019 (China Knowledge) - China and the UK announced the launch of the London-Shanghai Stock Connect on 17th June 2019 during the 10th Economic and Financial Dialogue held in UK. The scheme allows companies from both countries to dual list on Shanghai and London Stock Exchanges.
This is the first collaboration between the two stock exchanges which took a total of 4 years in the planning. The scheme was initially planned for launch last year but was delayed due to issues around Brexit.
Unlike the Shanghai-Hong Kong Stock Connect launched in 2014 which enables direct trade in company shares, this SH-LSE Stock Connect initiative only allows companies to list on both bourses by depositary receipts. Therefore, companies looking to list on the Shanghai Stock Exchange (SSE) and London Stock Exchange (LSE) will raise funds via Chinese depository receipts (CDR) and Global depository receipts (GDR) respectively.
For Chinese companies to list on the LSE, it needs to meet the criteria of the minimum market capitalization of at least RMB 20 bln. It is estimated that 260 companies listed in Shanghai are eligible. Meanwhile, companies which were listed in LSE for a few years and met certain criteria will be allowed to issue CDR via the Connect. These companies will become the first foreign companies to list in Mainland China.
By issuing GDR worth tenth of its total share capital, Huatai Securities is the first Chinese company listed on LSE via the Stock Connect. It is said that HSBC may be the first UK-listed company to go public in Chinese Mainland A-shares market.
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