A stock market connection scheme linking Shanghai and London will be broadened to include Shenzhen-listed companies, as well as capital markets in Germany and Switzerland, China’s securities regulator said on Friday.
Expanding the Shanghai-London Stock Connect scheme helps facilitate cross-border investment and promotes the opening-up of China’s capital markets, the China Securities Regulatory Commission (CSRC) said in a statement.
Under the current scheme, companies traded in Shanghai and London can list on each other’s bourses, by selling so-called depository receipts.
Chinese companies can raise fresh capital, but UK-listed companies cannot, only being allowed to issue Chinese Depository Receipts (CDRs) backed by existing shares.
On Friday, CSRC published revised rules for consultation, allowing offshore companies to raise fresh capital under the scheme.
CSRC said one goal was “to broaden the scope of application”, adding that “domestically, listed companies that meet the requirements of the Shenzhen Stock Exchange will be included”.
The second goal, it added, was “to allow overseas issuers to raise funds and adopt a market-based inquiry mechanism for pricing”.
So far, four Chinese companies are listed on the London stock exchange under the scheme, but no UK-listed firms have sold CDRs in Shanghai.
- Reuters, with George Russell
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