By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-08-21 11:31

Red chip companies, or mainland firms registered and listed overseas, are postponing their return to domestic stock markets, the Caijing Magazine reported yesterday.

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Wang Jianzhou, chairman of China Mobile Ltd, one of China's biggest mobile communication carriers, said on August 16 when the company announced its interim report, that the company has no timetable for returning to the domestic market, citing complicated procedures.

Kong Qingping, chairman of China Overseas Land & Investment Ltd, a Hong Kong-listed mainland firm, said the company will temporarily postpone plans for A-share listing and hope to increase its land reserves in the second half of this year.

"The postponement is due to laggard coordination with Hong Kong market regulators," a source close to the matter said.

Currently, the Hong Kong and Shanghai stock markets are competing for initial public offering (IPO) resources and Hong Kong's IPO market ranked second in the world. But with bullish A-share markets, Hong Kong is lusterless despite the fact that some companies listed in Hong Kong raised more than US$1 billion in the first half of this year. Examples include real estate developer Country Garden Holdings Company Limited and footwear producer Belle International Holdings Limited.

In future, fewer private enterprises will go public in Hong Kong as mainland assets are limited to listing overseas through holding companies registered overseas.

In addition, the return of H-share and red chips is bad news for the Hong Kong market. Market regulators have negotiated with mainland counterparts, but the coordination was not smooth, so the return of red chips was put off.

Some red chips are evading restrictions by issuing A shares through their controlling companies or subsidiaries, insiders said.

China Overseas Land & Investment Ltd controlling company China State Construction Engineering Corporation is making preparation for issuing A shares.

"The operation is much more complicated that the return of red chips, but this is the only way," an investment bank source said.

Statistics show that, by the end of July 31 this year, shares of a total of 143 mainland companies were traded on Hong Kong. 100 of them are from the main board and 43 from the Growth Enterprise Board, but only 42 of those 143 companies issued A shares.