China Considers New Bourse to Attract Overseas-Listed Firms: Reuters

China is mulling creating a new stock exchange to lure overseas-listed firms from markets like Hong Kong and the U.S., Reuters reported, citing two unidentified people, marking a new attempt by world’s second-biggest economy to bring its tech success stories back home.

China’s State Council asked the China Securities Regulatory Commission to lead studies on how to design the bourse that would target mainland companies listed offshore on exchanges like Hong Kong and the U.S., Reuters said.

Beijing is also hoping to attract global firms such as Apple Inc. and Tesla Inc. -- currently listed in the U.S. -- which would have the option of carving out local businesses and listing them on the new bourse, the report said.

The CSRC didn’t immediately reply to a fax seeking comment on plans on the new exchange.

Some of the world’s fastest-growing and biggest tech companies have sprung out of China, but few have listed there because of regulatory obstacles. China has made several attempts to lure its tech giants back, including piloting Chinese depositary receipts and setting up a tech-focused board on the Shanghai stock exchange.

PC maker Lenovo Group Ltd. and AI startup Megvii Technology Ltd. are both set to list in Shanghai this year using the CDR program kicked off three years ago.

Beijing’s latest initiative comes as U.S.-listed Chinese tech heavyweights such as Alibaba Group Holding Ltd., Baidu Inc. and Bilibili Inc. have raised $36 billion through secondary listings in Hong Kong since late 2019.

China’s plans could hurt the listing business at Hong Kong’s stock exchange which relaxed its rules to facilitate the secondary listings a few years ago. Chinese firms have flocked there from the U.S. as tensions between Beijing and Washington have threatened to curtail their access to U.S. capital markets.

Hong Kong Exchanges & Clearing Ltd. shares reversed earlier gains on Wednesday to close down 1.3%.

Those risks flared up again last week when the U.S. Securities and Exchange Commission said it would begin implementing a law that could result in Chinese companies being kicked off U.S. exchanges if they don’t allow American regulators to inspect their audit papers.

Read more: Few HKEX Worries as China Mulls Board for Global Firms: React

One option under discussion is upgrading an existing exchange such as a smaller bourse in Beijing, Reuters said. The capital’s municipal government has been lobbying for years to upgrade its listing platform for small and medium-sized firms to be the venue for U.S.-listed Chinese firms, the report said.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.