CRI听力:No Final Call to Launch International Board in China

Earlier this month, eight State Council departments, including the National Development and Reform Commission and the Ministry of Commerce, jointly issued a set of guidelines on fostering new advantages in international cooperation and competition, which included allowing foreign companies to list in the A-shares market as an important part of financial internationalization.

The news immediately became a subject of debate among investors. The Chinese stock market tumbles nearly every time there is news about the introduction of the international board.

"It depends on how well foreign companies perform. It's the same factor I consider when buying domestic ones. I think only big companies will list first, which will cause capital diversion."

"I think most Chinese investors don't really study a company, instead, they would rather follow insider information and analysis. So, overseas companies may not fit in the environment. I will be cautious at first and see how it goes. Our policies and regulations must also be considered."

Despite continuous statements made by regulators, the birth of an international board remains uncertain, which raises market speculation and risks.

According to Di Dongsheng, an international economics scholar with Renmin University, the new board will have a positive impact on China's economy in the long run.

"The international board will allow the Chinese to become shareholders of foreign companies denominated in RMB in the future. Currently, we are creditors to foreign countries with US dollars and euros."

Di says it will speed up the internationalization of the RMB, boost Shanghai' status as world financial center, and deepen the opening-up of China's capital market.

However, Di pointed out that there are huge concerns.

"The main concern for Chinese investors is that as foreign companies are increasingly attracted by China's high market valuation, there will be increased demand placed on available funding. Second, when domestic financial regulations and reforms are not fully in place, illegal practices in seeking profits are expected."

Simon Gleave, the partner in charge of Financial Services of KPMG in China says that these are not obstacles to launching the board, but suggests it is China's closed capital, non-convertible currency and capital transactions.

"At the moment, when global companies list around the world in different countries, their shares are freely traded between the different markets. For China though, we have a closed capital account. You cannot freely trade shares; you cannot freely buy foreign exchange to purchase the shares."

Gleave says at least twenty major global companies are interested in listing in Shanghai to build their brand, expand their business and raise capital in China. There is no set date for the launch of the board. Many economists and financial experts feel neither the market environment nor the A-shares operating system are ready for introducing foreign companies. But some suggest a timetable be provided to ease market speculation.

For CRI, I am Li Jing.