Challenges from WTO Membership
Advances in Chinese Economic Studies series
Edited by Kam C. Chan, Hung-Gay Fung and Qingfeng ‘Wilson’ Liu
Chapter 11: Overseas Listing of Chinese Companies
Congsheng Wu INTRODUCTION Cross-listing and the issuance of new shares in the international markets have expanded enormously since the mid-1980s. Cross-listing refers to a ﬁrm having its shares listed on one or more foreign exchanges, in addition to its home country stock exchange. Table 11.1 shows the total number of companies listed on various national stock exchanges in the world and the breakdown of the listings between domestic and foreign companies for 2004. The exhibit indicates that more than 2600 foreign companies have been listed worldwide. All developed stock markets have foreign listings. The top ﬁve exchanges with the most foreign companies are the New York Stock Exchange (459), the London Stock Exchange (351), the Nasdaq stock market (340), Euronext (334) and the Luxembourg Stock Exchange (192). Euronext was formed in September 2000 as a result of the merger of the Amsterdam Exchange, the Brussels Exchange, and the Paris Bourse. Additionally, several exchanges have a large proportion of foreign listings. In fact, foreign companies account for 82 percent on the Luxembourg exchange, and more than half of the listed companies on the Mexican exchange are foreign. Foreign stocks listed on a national stock exchange typically are traded in the form of a depositary receipt, not as ordinary shares. Depositary receipts (or depositary shares) are negotiable certiﬁcates issued by ﬁnancial institutions to represent the underlying shares of the foreign stock, which are held in trust at a foreign custodian bank. Foreign stocks listed in the United States typically take the...
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