Fears raised that speculation by overseas companies may increase

BEIJING - China's authorities are preparing for overseas companies wishing to float shares in China's A-share market. Foreign players are expected to list on the Shanghai international board in the second half of this year.

After a director of China International Capital Corp (CICC) said the Shanghai Stock Exchange accelerated the process to launch the new board, it reheated a long-term debate among officials and experts.

The international board can provide new channels for overseas investments and facilitate the internationalization of the yuan, said Yuan Shuqin, general manager in the China securities department of the United Bank of Switzerland (UBS).

However, Yuan said he was concerned that any sharp gains of new stocks on their trading debut in the country's A-share market may increase speculation from overseas.

"High dividends from multinational companies' blue-chip shares will draw a large string of yuan deposits to the fundraising pool, and make the A-share market globally competitive," said Liu Kai, an analyst from Guosen Securities Co Ltd.

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Large international companies, such as HSBC and exchange operator NYSE Euronext, are likely to list shares on the Shanghai Stock Exchange, according to the director from CICC. He also recommended medium-sized firms to list on the Hong Kong Stock Exchange.

China's regulators recently accelerated the approval procedures for domestic securities companies seeking joint-venture business with overseas partners. Compared with domestic brokers, analysts said that joint-venture brokers were regarded as more competitive for underwriting business on the new board.

Three joint venture securities companies - Huaying Securities, JP Morgan First Capital Securities and Morgan Stanly Huaxin Securities - had received approval from China Securities Regulatory Commission (CSRC) by the end of 2010.

Now Orient Securities Co Ltd is in talks with Citigroup to launch a securities broker together.

By the end of last year, the CSRC approved 10 Sino-foreign joint ventures for underwriting business. Industry insiders said that will help to introduce the international board in the second semester.

There are two ways for overseas companies to list on the Shanghai Stock Exchange. They can issue initial public offerings or depositary receipts traded in Chinese securities markets, according to the CSRC.

The new board is also expected to draw Chinese red-chip companies that are running businesses on the mainland but are listed in Hong Kong, such as China Mobile, back to the A-share market.