Local Shanghai enterprises have raised 70 bln yuan in major overseas capital markets like Hong Kong Stock Exchange, NYSE and NASDAQ. Their overseas financing has brought no less than 100 bln yuan to them if enterprises like Shenyin Wanguo Hong Kong are taken into account.

Shanghai enterprises have begun going public overseas since SINOPEC Shanghai Petrochemical Co. Ltd's listing in Hong Kong main board in 1993. Before 2000, only a few large SOEs such as Eastern Airlines had gone public in overseas capital markets.

The climax for Shanghai enterprises' floatation on the overseas market didn't arrive until June, 2003 when the Lianhua supermarket was listed in Hong Kong. Five shanghai enterprises have listed in Hong Kong main board and growth enterprise market since 2004. More than 10 Shanghai stocks are traded in H-share market so far.

American stock markets have become majors place from where Shanghai enterprises borrow money. It was the Shanghai enterprises that played a major role in the emerging "China-concept network stock" in NASDAQ. 51Job and Shanda, among others, once become "stars" on overseas stock markets.

Inland Chinese enterprises raised US$ 7.83 bln at Hong Kong H-share market in 2004. Four Shanghai-based companies, SMIC, Shanghai Forte Land Co., Ltd, Shanghai Qing Pu Fire Control Appliance Co., Ltd and China Shipping Container Lines raised nearly US$ 3 bln by issuing H-shares. In particular, the SMIC, listed in Hong Kong and New York raised 1.8 bln in its IPO.

It is more important for Shanghai enterprises to "borrow mechanism" than "borrow money" from their overseas IPO. The mature overseas capital markets perform more transparent and fairer rules and supervision on listed companies. By taking advantage of the transparent market environment and rules of overseas capital markets, Shanghai enterprises will be able to optimize their corporate governance, speed up internal institutional innovation and shift in operating mechanism.

Source: People's Daily