Huatai Securities, a Chinese-based and Shanghai-listed broker, announced via a regulatory filing today with the Shanghai Stock Exchange that it has received approval from the China Securities Regulatory Commission (CSRC) to issue global depository receipts (GDR) at the London Stock Exchange (LSE).
According to a report from Reuters, approval from CSRC marks the launch of the Shanghai-London Stock Connect, which facilitates companies publicly traded in Shanghai and London to list on each other’s bourses.
The Shanghai-London Stock Connect allows Chinese-based companies to raise funds by issuing GDRs in London. However, this doesn’t go both ways as initially, London-listed firms can only issue CDRs backed by existing shares.
While Huatai Securities did not disclose its fundraising target on the LSE, the Chinese brokerage had previously said that it aims to raise a minimum of $500 million.
What to Look for in a Liquidity ProviderGo to article >>
In a statement to Reuters, Zhou Yi, Chairman and CEO of Huatai said: “The program offers us access to one of the deepest and most influential capital markets in the world. We are pleased to be the first issuer to tap this new market of enormous potential and unprecedented opportunity.”
He added that he expects that the offering will allow Huatai Securities to increase its operations overseas, as well as strengthen its capital position.
China seeks to open its capital markets
Recently, China has been making a notable effort to expand access to its capital markets. The Shanghai-London Stock Connect, which has a range of businesses including brokerages and investment banking, is part of the country’s latest efforts to achieve this.
Already, China has linked the mainland with Hong Kong’s stock market in a similar connect scheme. Furthermore, top financial institutions and regulators have also been signing memorandums of understandings (MoUs) with other countries in an attempt to increase access to China’s capital markets and vice versa.
Earlier this month, Finance Magnates reported that the Moscow Exchange (MOEX), the largest exchange operator in Russia, signed a MoU with one of China’s largest investment banks, China International Capital Corporation (CICC).
The purpose of the MoU is to strengthen the cooperation between Russia and China, specifically when promoting investment and the development of the offshore Chinese yuan market in Russia.