Huatai jumps at launch of joint listing
LONDON: Huatai Securities Co Ltd, one of China’s largest brokerages, rose more than 7% yesterday in Britain’s first listing via the long-awaited London-Shanghai stock connect project.
Under the Connect scheme, Shanghai-listed companies can raise new funds via London’s stock market while British companies can broaden their investor base by selling existing shares in Shanghai.
Huatai’s listing comes as Britain and China hold the next round of talks to strengthen economic ties.
Against the backdrop of an ongoing trade war between the United States and China, Britain wants to offer an attractive trading environment to Chinese companies as it sees cooperation with China as critical to its post-Brexit future.
Huatai’s global depositary receipts (GDRs) rose as much as 7.1% to $21.96 earlier before easing to change hands at $21 by 0910 GMT.
British Chancellor of the Exchequer Philip Hammond launched Stock Connect’s first day of trading at the London Stock Exchange, calling it a “a ground-breaking initiative, which will deepen our global connectivity as we look outwards to new opportunities in Asia.”
But while the government says British exports to China have tripled since the first round of economic and financial talks in 2008, from £7.6 billion ($9.56 billion) to £23.1 billion in 2018, the appeal of trading in Shanghai remains low.
Bankers and analysts said Huatai’s listing in London was unlikely to spark similar moves from British companies who have expressed caution over the local regulatory regime.
The number of Chinese companies seeking to follow in Huatai’s footsteps is also scant as bankers say initial interest from various firms has yet to translate into concrete listing plans.
Huatai sold 75 million GDRs at $20.50 each on June 14, the bottom of its price range, representing 9.1% of its outstanding share capital.
Britain’s Financial Conduct Authority (FCA) worked closely with the China Securities Regulatory Commission (CSRC) on the Connect project and signed a memorandum of understanding regarding regulatory cooperation.
“The new co-operation we’re announcing today will be an important contributor to the success of the scheme,” said FCA boss Andrew Bailey.