(Yicai Global) Jan. 9 -- Ten Chinese mainland-listed companies issued global depository receipts in Europe and the UK last year, raising more than USD3.8 billion, after China expanded its London stock connect program to include Switzerland and Germany.

Nine of them, including battery materials supplier Ningbo Shanshan, went public on the SIX Swiss Exchange while wind power equipment maker Ming Yang Smart Energy Group floated on the London Stock Exchange. More than 30 other companies are lining up to do the same.

Europe is attracting an increasing number of Chinese firms seeking equity financing after the Chinese Securities Regulatory Commission revised its rules in February last year to open up a link between Chinese and European capital markets. And Switzerland is proving to be the most popular destination.

It only took an average of four months for these 10 companies to go from the planning stage to issuance. This is less than half the length of time needed to go public on the London bourse in the early days of the London-Shanghai stock connect scheme in 2019.

But after a four-month lockup period, when an investor cannot sell his/her shares, the first five firms to issue GDRs in Europe last year have all said that the number of their stocks on the European markets have halved. It means that foreign investors are converting them into shares on the mainland bourses and selling them.

It is normal investment behavior to sell the GDRs, banking analyst Wang Jiyue told Yicai Global, adding that Chinese companies are mainly issuing shares in Europe for financing purposes. As European investors become more familiar with Chinese companies, long-term listings in European markets may be possible, he said.

The efficiency of the connection between the two capital markets still needs to be improved and China’s Ministry of Finance announced an audit and regulatory cooperation with the Swiss Federal Audit and Supervision Office in December.

Editors: Dou Shicong, Kim Taylor