By Maurits Elen
The time isn’t ripe for Shanghai’s financial hub to allow foreign companies into its equity market,
Although a specific reason wasn’t given, Zheng did state that there is still preparation work that needs to be done before a transition can be made. This includes regulations for its international board.
In the meantime, Shanghai is about to establish an over-the-counter exchange and strengthen its regulation on the property market. According to the Mayor:
”Timing is very critical to the introduction of the
international board. In my opinion, at the moment, this is not a good timing. So there is no clear timetable for the international board at the moment.”
”Shanghai plans to strengthen efforts to control the municipality’s property market this year as home prices are still “too high. The city will lower the standards for applications on affordable housing this year to cover more families and detailed policies will be released this quarter.”
Shanghai’s Hang Seng stockmarket, China’s main stock market index, currently is the third-biggest equity market in the world, but declined 20% last year due to a tighter monetary policy. The move forced a hold on companies’ operating cash flow, thereby negatively impacting domestic demand.
China’s 85 million individual investors are currently restricted from purchasing shares in foreign countries. An entry for foreign companies into Shanghai’s stock exchange would not only broaden options for investors, but also spur equity into the city and increase domestic demand.
Companies such as Unilever, HSBC Holdings, Lawson, and Coca-Cola Co are already eager to list their shares in the city.