Shanghai's international board 'closer and closer'
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China is actively pushing forward an international board at the Shanghai Stock Exchange, senior officials and regulators told the Lujiazui Forum in Shanghai yesterday.
"I want to tell you all that the international board is coming closer and closer to us," said Shang Fulin, chairman of the China Securities Regulatory Commission.
Shanghai Party Secretary Yu Zhengsheng told the forum the city will take steps to allow qualified overseas institutions to sell yuan-denominated bonds and shares in Shanghai as the city aims to build its global footing as a dominant financial hub by 2020.
"Shanghai will make use of the opportunity of expanding the cross-border use of the yuan on the yuan bonds and shares," Yu said. "We will better leverage global financial assets through such programs in Shanghai."
NYSE Euronext is working with the Chinese government and Shanghai's stock exchange to prepare for the launch of the city's international board, Jan-Michiel Hessels, Euronext's chairman, said.
Speculation is mounting that the long-anticipated international board, on which overseas companies can sell yuan-backed shares, may debut in the second half of this year.
Overseas firms such as HSBC, Standard Chartered, Bank of East Asia, Procter & Gamble, Unilever and Royal Dutch Shell have all expressed an interest in listing in the new board.
Also at the forum yesterday, Zhou Xiaochuan, governor of the People's Bank of China, said that China should follow macro-prudent supervision as soon as possible to better manage the economy.
China's high savings rate may lead to high investment growth and cause overheating, overcapacity or asset bubbles, he said, noting that prudent supervision was needed against that background.
To implement a prudential macro-economic regulatory framework, China should work to enhance financial stability, which may require its banks to have adequate capital, he said.
China has set a minimum 11.5 percent requirement on the country's big five banks' capital adequacy ratio to caution against financial risks.
The country needs to strike a balance between economic growth and consumer prices, Zhou said.
China is "cautiously" promoting cross-border use of the yuan in financial transactions in addition to trade and investment, he said, adding that the convertibility of the yuan should be a gradual, orderly, mid-to-long-term process.
"The growing use of yuan in cross-border activities will require the currency to become fully convertible in a gradual and orderly way," he said.
Shang said direct-financing, such as bonds and stock, still accounts for a small portion of total financing in China though it was growing rapidly in the country.
"It makes financial risks highly concentrated in the banking sector," he said.
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