Anti-China sentiment to delay Shanghai foreign equities trade

Author: | Published: 17 Nov 2011

Foreign companies will remain unable to sell shares in renminbi (RMB) on the Shanghai Stock Exchange until market sentiment towards China improves.

The Shanghai Stock Exchange this week announced the exchange was ready to let foreign equities trade on the exchange’s international stocks board. But Mainland market participants believe the service will launch only when China’s A-share market has improved and confidence has returned to local and institutional investors.

Hubert Tse, a Shanghai-based partner at law firm Boss & Young, told IFLR he did not expect the board to launch before the second half of 2012 at the earliest. “Launching the board now may further weaken an already under-performing A-share market,” said Tse.

Central government’s push to tighten liquidity onshore has seen interest rates and bank reserve ratio requirements rise significantly in recent months. “While the market continues to lack liquidity, regulators will be reluctant...