Shanghai set to allow listings of foreign groups

China intends to allow foreign companies to list on the Shanghai stock exchange as part of its plan to turn the city into a global financial centre.

A statement issued yesterday by China's State Council, or cabinet, mapped out a cautious plan to increase foreign investor participation in the mainland market and to allow foreign companies to issue A shares. It gave few details and no timetable for when it might happen.

The goal is to allow “qualified foreign firms” to issue A shares “at an appropriate time”, gradually to increase renminbi-denominated bond issues by multilateral development agencies, and gradually to increase the participation of foreign investors in the city's financial markets, said the statement.

Beijing last month said it would support Shanghai's long-held ambition of becoming a global financial centre, setting a goal of 2020.

City officials are pleased to have secured the central government's sanction for their plan but acknowledge many obstacles to its implementation. Financial industry sources point to non-convertibility of the currency, the country's still- developing legal system, lack of experienced personnel in the financial services sector and a lack of transparency and sophistication in the financial system.

At a press conference in Shanghai yesterday, a senior Chinese official would not be drawn on the question of convertibility of the renminbi.

“The full convertibility of the renminbi is related to complex factors and so far we don't have a timetable on that,” said Liu Tienan, a vice-chairman of the National Development and Reform Commission.

Beijing said last month that it would also support Shanghai's bid to become a world shipping centre. Yesterday, the State Council said that it would allow some large domestic shipping companies to establish financial leasing companies, which could borrow funds and issue bonds on the interbank market.

Development of derivatives linked to shipping indices would also be encouraged.