Shanghai mayor says preparatory work under way, gives no deadline

Han Zheng, the mayor of Shanghai, on Tuesday delayed the launch of the long-awaited international board, which would allow foreign companies to list on the world's third-biggest stock market.

Establishing the board entails complicated legal, accounting and technological factors, which the city has been working on, said Han. But the preparatory work won't be completed in the foreseeable future, he added, although the city has no plans to abandon the board.

"It's a very, very complicated issue," said Han at a news briefing during the annual session of the National People's Congress in Beijing.

At the end of 2009, the central government gave Shanghai the green light to launch the board, as an important step in expanding the country's financial markets and building Shanghai into a global financial center.

The move, which would make China's capital account more convertible, received an upbeat response. Many multinationals, including HSBC Holdings PLC, publicly spoke about listing.

However, local officials have avoided setting an exact timetable for the introduction of the board.

Wang Jianhui, chief economist with Southwest Securities Co Ltd, said the launch of the international board depends on good timing.

"It's true there are important issues that need to be addressed properly, but timing is also important," he said. "The stock market has just started to improve and the establishment of an international board would put pressure on it."

The benchmark Shanghai Composite Index has dropped significantly since the Shanghai Stock Exchange said in November that it was "basically ready" to launch the board.

Chao Kejian, the director of the offering and listing department at Shanghai Stock Exchange, has said that the board will be a major platform for the return of red-chip stocks - China-based companies that are registered overseas and, therefore, technically foreign. There are more than 400 red-chip companies, of which about 100 of them are listed in Hong Kong.

The manner of listing has already been established. Companies will be listed through initial public offerings and not depositary receipts.

gaochangxin@chinadaily.com.cn