HONG KONG/SHANGHAI Oct 16 China's securities
regulator issued its second denial in as many weeks on Wednesday
that foreign companies will be allowed to issue shares in the
new Shanghai free-trade zone, as reform hopes escalate ahead of
a key Communist Party November meeting.
The Wall Street Journal reported late on Monday, citing two
unidentified sources with direct knowledge of the matter, that
China may allow foreign companies registered in the free-trade
zone to sell shares in a controlled environment that might serve
as a test for the long-discussed introduction of the
"international board" on the Shanghai main stock exchange.
"We wish to reiterate that there are no plans to allow
qualified foreign companies to issue shares in the Shanghai free
trade zone or anything similar in our upcoming policy document
on the matter," the China Securities Regulatory Commission
(CSRC) said on its official twitter-like Weibo account.
The statement follows a similar report last Thursday on the
website of CSRC-run Securities Times newspaper, which was
swiftly followed by an official denial just hours later.
Plans for an international board which would allow foreign
companies to list in the mainland were first mooted in 2009 as
part of efforts to push Shanghai as a global financial hub by
2020, but the unstable state of the A-share market put paid to
In fact, previous suggestions by regulators that the
international board's launch was imminent have caused brief
stock market routs. Chinese investors bailed out of domestic
stocks on the assumption that foreign tickers would steal
investment capital from Chinese companies.
This time around, however, there appeared to be little
direct stock market reaction.
At the launch of the new free-trade zone in Shanghai at the
end of September, Dai Haibo, deputy director of the zone
administrative committee, said foreigners and Chinese in the
zone would be allowed to invest funds directly for the first
He did not say whether they would also be subject to a
Currently, foreign and Chinese investors have only been
allowed to invest cross-border by buying into funds regulated
through either the Qualified Foreign Institutional Investor
(QFII) programme or the Qualified Domestic Institutional
Investor (QDII) programme, both of which are restricted by
The State Council, China's cabinet, had said last month that
it would open up its largely sheltered services sector to
foreign competition in the zone and use it as a test bed for
bold financial reforms, including a convertible yuan and
liberalised interest rates.
The Chinese Communist Party is due to hold its third plenary
session of the party's top body sometime in November.
This has been billed as a watershed for China's development,
just like one in 1978 when Deng Xiaoping unveiled his historic
reforms to open China to the rest of the world or in 1993 when
the party endorsed a "socialist" market economy.
(Reporting by Clement Tan and Pete Sweeney; Editing by Kim