(Yicai Global) Dec. 5 -- The upcoming Shanghai-London Stock Connect program, which is expected to go live next week, will bring about opportunities for Chinese financial institutions, according to an official at the Shanghai bourse.
British companies issuing Chinese depositary receipts should go through Chinese institutions, and their underlying stocks may also be held by Chinese banks' London branches, Fu Hao, director of global business development, told Yicai Global in November. Shanghai-listed firms looking to issue global depositary receipts will also look to Chinese brokerages that offer overseas services, he added.
"Although British firms can issue Chinese depositary receipts in China, which is not the same as a public offering, they still need to rely on local brokers to establish liquidity," Fu said.
The stock connect's opening ceremony is scheduled on Dec. 14 in London, a source who chose to remain anonymous told Yicai Global. Shanghai bourse executives will attend and announce a list of Chinese and British firms -- about 10 of each -- who will be first to use the scheme, he added.
Fu believes that the number of companies listed through the program will increase slowly over time.
"It will not include too many companies to start with, as this will help Chinese institutions accumulate experience -- Chinese investment banks should take this opportunity to go global."
He also sees the move as a boost for Shanghai's goal of developing into an international financial hub. "When multinational companies think of Shanghai when they are planning for equity or debt financing, it means the city really is an international financial center," he said.
Editor: James Boynton