The Shanghai Stock Exchange is Ready for the World

David Nealis in Shanghai

Recently the Shanghai Stock Exchange stated it is “basically ready” to let foreign issuers sell stock, opening the door for companies like CAT, McDonalds, HSBC and Coke to list in the world’s second biggest equity market.

Xu Ming, executive vice president in charge of the international stocks board, said trading should start “as soon as possible when the time is ripe” in a Nov 11 interview at the Shanghai Stock Exchange. Xu went on to say while there’s no timetable that the exchange has finished work on technological and regulatory requirements.

Clearly they are interested in firms that have exposure to China “We favour companies of good quality, that are stable and are of fairly large scale,” Xu said. “We need to consider the protection of small investors and see if the operations of the companies carry risks.”

There has been quite a bit of positive feed back from industry professionals, the common thinking seems to be it will stimulate greater interest in the Greater China region.

I believe there is some value to global brands to list on the Shanghai Exchange;

First it gives international firms exposure to China’s 85 million individual investors who are restricted from buying shares abroad by China’s capital controls, firms would benefit from any gains in the value of the RMB, and this could be very good marketing for the firm’s products in the China market.

 The trading of foreign equities on the Shanghai Stock Exchange would be the big step forward for Shanghai’s drive to become a global financial center by 2020. Though in all honesty I would be much more excited if foreigners were able to trade in China (excluding QFII).