China's securities regulator has suspended approvals for private-owned enterprises to list on overseas stock markets in a move to promote the Shanghai and Shenzhen exchanges, the Shanghai-based Oriental Morning Post reported Thursday.

The China Securities Regulatory Commission (CSRC) has suspended approvals since April and, according to an unnamed source in the newspaper, the move is "not so much an official policy as an internal guideline".

Mainland-incorporated companies would be allowed to list overseas only if they seek to raise over US$1 billion, according to the "internal guideline".

CSRC doesn't have such a written rule, said a source close to the regulator, but "Chinese authorities indeed look forward to seeing more private enterprises list in Shanghai and Shenzhen."

West Mining Co, based in Xining, Northwest China's Qinghai Province, switched its listing to Shanghai at the end of May from Hong Kong due to a slow approval process and the regulator's "suggestions", the newspaper added, saying that West Mining's Shanghai IPO has won approval from CSRC at the beginning of this month.

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Motorcycle maker Chongqing Lifan Holdings also abandoned its Hong Kong listing in favor of Shanghai. The change was because of the current bullish stock market, investors' enthusiasm, and a relatively simple and quick government approval process, which means higher profits and lower expenses, said the company's chairman Yin Mingshan. But he added, "The government encourages fresh injections into the local equity market to promote its sound development."

However, a CSRC official warns there may be some misunderstandings about the approval procedure. "A slow approval process may be caused by some issues. After all, not all applications have to be immediately approved," he explained.

"CSRC doesn't make any changes in its policies supporting enterprises to raise funds in stock markets," said the official. "Given the current domestic market environment, many enterprises hope to list locally. We respect their decisions."

Homecoming journey

To encourage more domestic listings, CSRC would also relax rules allowing Chinese firms incorporated overseas to return to the Shanghai and Shenzhen markets. Relevant drafting rules, which have reportedly been circulated among market players for their feedback, may come into effect on July 1.

So far, 96 H-share companies have listed on Hong Kong's main board while 45 smaller ones are listed on the Growth Enterprise Market (GEM), the second board of the Hong Kong stock exchange.

According to criteria set in the drafting rules ranging from market value to earnings, 21 of the firms would be eligible for domestic listing. Top wireless carrier China Mobile, computer maker Lenovo Group, and oil company CNOOC are expected to be in the first batch to follow that route.

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