Shanghai says time ripe for global IPOs

(Shanghai Daily)

08:36, September 16, 2011

The global situation is such that the time is ripe for Shanghai to launch its much anticipated international board, the city government said yesterday. 

The city will also encourage more foreign firms to sell yuan-denominated bonds in the financial hub, it said.

The international board, which had been expected to launch this year, will be a good financing platform for foreign firms now struggling amid financing difficulties, especially in eurozone countries, Fang Xinghai, head of Shanghai's financial services office, told a press conference.

"Those foreign firms can use the money they raise from the international board in their business back home or in the Chinese mainland market," he said. "Either way, this opens a very good door for them."

For China, the launch of the foreign board will also be helpful for the country to seek a new role in global financial markets, Fang said.

Issuing yuan-denominated bonds by foreign companies to Chinese investors is another way that could help overseas corporations overcome their financial problems. 

"Shanghai needs to introduce more of those foreign corporations to issue yuan-denominated bonds and more foreign institutional investors to join the local bond market," Fang said. "For China, this is a good opportunity to promote the internationalization of renminbi." 

Shanghai is seeking to attract multinationals to the international board, a key step along the road to become a financial center on a par with London and New York by 2020.

Firms such as HSBC, Coca-Cola, General Electric Co, Unilever Plc and Volkswagen AG have all expressed interest in the new board.

However, Fang considers the possible purchase of European sovereign bonds "not a good choice" for China.

"It's not a good time to buy government debt at the moment because those countries are very likely to continue their loosening monetary policies, which could lead to depreciating currency and rising inflation," Fang said.

"Companies' equities, commodities and agricultural products will be ideal investments for now," he said.

Fang also revealed that the city plans to offer trading in derivatives products linked to interest rates and foreign exchange. Shanghai pledges to speed up the process of allowing cross-border foreign exchange-traded funds to list in Shanghai, Fang said. The Shanghai stock exchange, which has played the leading role in the country, is facing increasing competition from its rival in Shenzhen.

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