China’s domestic investors may soon have the opportunity to invest in the US-listed shares of the country’s tech giants via the Shanghai and Shenzhen bourses, according to sources cited by the South China Morning Post.
The sources said to the Post that the Shanghai and Shenzhen stock exchanges are busy fine-tuning rules that will allow domestic investors to trade in US-listed Chinese tech companies on the local bourses by as early as this year.
While China’s domestic investors can already trade in the Hong Kong-listed shares of Chinese companies via the Stock Connect initiative that links the Hong Kong, Shanghai and Shenzhen exchanges, they cannot yet invest in US equities.
According to the sources China’s senior policymakers are concerned about the number of leading Chinese tech companies opting to list in outside jurisdictions.
““China’s top leaders are concerned that China’s best tech companies are all listed in the US or Hong Kong, and has urged the securities regulator to produce a plan to solve the problem,” said one of the sources to SCMP.
“The idea had been raised a while ago, but discussions and preparation have been accelerated after Xiaomi decided to go public in Hong Kong.
“It is unlikely that the VIE (variable interest equity) related restrictions will be scrapped in near future, but domestic trading of overseas listed shares could become easier to be realised.”
Listing on long-established bourses abroad has become increasingly popular with China’s top tech companies, due to the increased convenience and speed they provide.
China’s securities regulator remains dilatory and lumbering in comparison, taking more than two years on average to approve IPO’s.
Internet giant Alibaba is listed in the US and chief rival Tencent is listed in Hong Kong, while the Hong Kong IPO of smartphone-maker Xiaomi is set to be the world’s biggest tech listing in 2018, potentially raising as much as USD$100 billion.