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More mainland companies to issue shares in overseas markets in Q3.
The door for Chinese companies to list their shares outside the mainland market re-opened in Hong Kong this month, after two companies raised more than HK$20 billion ($2.57 billion), according to Fang Fang, CEO of China investment banking at JPMorgan Chase & Co. "In June, and the coming third quarter, we will see more mainland enterprises issue shares in Hong Kong, in the United States or other overseas markets," he said. Fang added that foreign institutional investors are becoming more comfortable with the slightly lower GDP growth rate in China, which is expected to be 7.5 percent this year rather than the super-high double-digit growth of the past decade.
In May, China Galaxy Securities Co Ltd and Sinopec Engineering (Group) Co Ltd completed IPOs in the Hong Kong market, raising HK$8.3 billion and HK$13.7 billion, respectively. Sinopec Engineering was the largest IPO in Hong Kong in the first half. China Galaxy's shares rose 6 percent on its offer price on its opening day's trading, but Sinopec Engineering fell 0.4 percent on its debut.
Last week, the China Securities Regulatory Commission said that a memorandum of understanding had been signed with the US on the sharing of audit details on Chinese companies listed in the US. Analysts said the market welcomed the agreement, and that it was good news for Chinese companies and US investors alike. Under the MOU, Chinese companies listed on US markets will offer audit details to the US audit regulator, the Public Company Accounting Oversight Board, based on Chinese laws and regulations, which it is hoped will improve their financial quality and operational management.
Accounting firms including Deloitte, KPMG and Ernst & Young were charged by the US securities regulators in December with violating securities laws after providing financial services for US-listed Chinese companies.
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