Shanghai set to launch international board in 2011

An international board in Shanghai looks set to be launched next year, with top Chinese officials predicting international companies will find it simple to be listed.

Fang Xinghai, director-general of Shanghai's financial service office, said the board will be launched "some time next year, hopefully".

Fang told a financial forum in Shanghai on Dec 1 that approval procedures for overseas companies seeking listing on the board will be made simpler and faster than for domestic companies.

"We will not let companies feel that they have to endure unacceptable procedures," he said, responding to questions that listing procedures on the China's stock market are cumbersome.

Speculation is rife the Chinese government may use excessive liquidity as an opportunity to build the fundraising capacity of the city - in the form of setting up an international board to accommodate overseas companies.

The China Securities Regulatory Commission (CSRC) said earlier this year that overseas companies could list on the new board through initial public offerings (IPO) or depositary receipts traded on Chinese stock exchanges.

The CSRC is also exploring the possibility of overseas companies issuing yuan-denominated bonds and other debt instruments.

The new board is considered a key step in making Shanghai an international financial center as well as broadening investment channels for China's growing yuan savings and making the A-share market internationally competitive.

Its launch is being widely watched as it could draw a string of multinational companies, including HSBC, Coca-Cola, General Electric and Walmart to the mainland fundraising pool.

Chinese red-chip companies, such as China Mobile, with businesses in the mainland but are listed in Hong Kong, are also expected to return to the A-share market through the new board.

The listing of foreign and red-chip companies will also provide legal, accounting and securities firms with business opportunities and new revenue streams.

Industry insiders said Fang's comment is the first from a top Chinese official, after almost half a year of silence. His comments come after the central bank in Beijing called for a speedier launch of the international board, which could be used as a pool for hot money hedging.

Ma Delun, deputy governor of the People's Bank of China, said the central bank hopes the international board will be launched as soon as possible, adding that market and industry demand for the board is real.

Zhou Xiaochuan, the central bank's governor, recently put forward the idea of constructing a "pool" to accommodate inflowing speculative capital, or "hot money", a move interpreted as a prelude to an array of policies to contain rising inflation and asset bubbles.

Controlling fund liquidity may be a difficult task. By the end of September, the country's broad money supply, or M2, had reached nearly 70 trillion yuan (8 billion euros), more than double last year's GDP of 33.54 trillion yuan.

The government is set to take more measures to manage excessive liquidity, besides regular monetary policies such as increasing interest rates and bank reserve requirement ratios.

Zhang Ran contributed to this story.