China’s Capital Markets
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China’s Capital Markets

Challenges from WTO Membership

Edited by Kam C. Chan, Hung-Gay Fung and Qingfeng ‘Wilson’ Liu

China’s economy has been growing rapidly since the late 1970s and is expected to maintain this momentum in the foreseeable future. Coupled with the biggest population in the world, there is tremendous growth potential for China’s capital markets and financial services industry, both vital to the continued development of the economy. The contributors present research on all facets of China’s markets including: stock and bond markets; futures and over-the-counter markets; regulatory issues; and the development and roles of financial institutions such as brokerage firms, banks and insurance companies. Also addressed are the recent performance of equity markets, the emergence of small and medium enterprises, and the state banks’ bids to be listed in overseas stock exchanges. Taken together, the book sheds a welcome light on China’s overall economic growth.
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Chapter 11: Overseas Listing of Chinese Companies

Congsheng Wu


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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