China Pauses U.K. Listings Project
02 Janeiro 2020 - 11:43AM
Dow Jones News
By Xie Yu
Beijing has halted a high-profile project letting Chinese
companies list in London, people familiar with the matter said, in
a move that could signal chillier financial relations with
Britain.
The Shanghai-London Connect project has been put on hold,
according to a Shanghai Stock Exchange official and a senior banker
in Hong Kong. Neither gave a reason for the hiatus, which was
reported earlier by Reuters.
The Connect program, which was years in the making, launched in
June with a roughly $1.5 billion offering of London-listed global
depositary receipts by China's Huatai Securities Co. It is separate
from a larger trading scheme linking Hong Kong to Shanghai and
Shenzhen.
The Shanghai-London tie-up was meant to show how China continues
to embrace globalization, while simultaneously deepening London's
ties with China and boosting its credentials as a financial center
ahead of Brexit.
In September, when London Stock Exchange Group PLC was fending
off an unwanted approach from rival Hong Kong Exchanges &
Clearing Ltd., LSE Chief Executive David Schwimmer touted
Shanghai's prospects as a financial hub and his group's direct
links there, according to media reports.
However, relations between the two countries have been tested by
unrest in Hong Kong. In November, London condemned China's
treatment of a former official at Britain's Hong Kong consulate as
torture, in a case tied to the protests.
It couldn't be learned how formal the hold-up was, or how long
it was likely to last. A person familiar with the matter said the
LSE hadn't received any notification that the system was closed or
blocked, and the U.K. exchange viewed the Connect as still
operational.
Likewise, another senior banker, who advises SDIC Power Holdings
Co., said that while the Chinese power company believed now wasn't
the right time to launch a deal, work continued on a potential
listing. SDIC called off a sale of securities through the Connect
program in December, blaming market conditions. This banker
expressed skepticism that U.K.-China relations would derail a deal
in the long run.
The Connect system lets Chinese companies issue tradable
securities in London, backed by shares in Shanghai. The plan
envisages U.K. companies eventually being allowed to list similar
instruments in China. However, only Chinese companies can raise new
money, and the program will be structured to limit capital
flight.
Despite fanfare in Chinese state media, analysts and investors
have played down the program's appeal, since larger foreign
institutions can already buy or sell mainland-listed Chinese stocks
via Hong Kong, while Chinese investors are unfamiliar with many
British companies.
Chinese foreign ministry spokesman Geng Shuang told a regular
briefing on Thursday he wasn't aware of the specifics, adding that
he hoped Britain would "provide a fair, just and open,
nondiscriminatory environment for Chinese businesses to
invest."
--Joanne Chiu in Hong Kong and Anna Isaac in London contributed
to this article.
Write to Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires
January 02, 2020 09:28 ET (14:28 GMT)
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