China is reportedly pressing pause on approvals for new applications to sell global depository receipts, which is expected to hit the financial center of Zurich.
China's securities regulator has suspended approval of applications to issue global depositary receipts (GDRs), according to a «Bloomberg» report citing unnamed sources.
The pause is partially due to concerns about the substantial portion of GDR issuance being taken up by Chinese investors who later convert them into shares at home for arbitrage. Authorities are worried that the expected wave of GDR issuance could lead to significant downward pressure on China's stock market.
GDRs can be swapped for A-shares after 120 days and usually trade at a discount compared to the home shares.
Zurich Hit
Beyond issuers and investors, the move is expected to hit the financial center of Zurich where GDRs are primarily listed.
Since 2022, 11 Chinese companies have raised a total of $3.6 billion through GDR issuances on the Six Swiss Exchange, according to Dealogic data.
