The chief executive of Morgan Stanley’s China securities joint venture reportedly suggested the establishment of a new board in the mainland for offshore-listed Chinese and foreign firms.
China should consider establishing a board with a lower profitability threshold for IPOs by tech firms, startups and foreign companies, said Morgan Stanley’s China securities JV CEO Jing Qian in a report by «Shanghai Securities». She also suggested relaxing profitability requirements to list on Shanghai’s tech-focused STAR Market and Shenzhen startup board ChiNext.
According to Qian, such moves could help attract offshore incorporated firms with businesses mainly in China – so-called red chip companies – to list in the mainland compared to the currently restrictive requirements which would make only half of Hong Kong-listed red chips eligible. Challenges to meeting eligibility requirements currently include high market capitalization and a complex approval process.
U.S.-China Tensions
Rising U.S.-China tensions are placing pressure on red chips seeking funding from public markets with Washington threatening to delist firms that fail to meet auditing requirements. Some firms are seeking secondary listings in Hong Kong as a replacement fundraising source.
Any move that could ultimately attract more firms to list in China will benefit Morgan Stanely’s expansion drive in the mainland where it has a securities joint venture with over 94 percent ownership. It houses more than 180 people and has completed eight IPO underwriting deals, according to the firm.
