Caixin
Apr 16, 2018 08:51 PM
FINANCE

New Frankfurt Exchange Aims to Lure Chinese High-Tech Firms

* China Europe International Exchange aims to connections between Chinese, German manufacturing initiatives

* Board is the latest vehicle allowing Chinese companies to list both at home and abroad

(Beijing) — China’s strategy to dominate advanced high-tech industries may be aggravating trade tensions with the U.S, but Chinese and German financial-market operators are hoping a new exchange in Frankfurt will help advanced manufacturers’ issue shares in Europe.

The China Europe International Exchange (CEINEX), set up in late 2015 by the Shanghai Stock Exchange, German stock exchange operator Deutsche Boerse, and the China Financial Futures Exchange, started operating in November and announced its first Chinese listing last week — home-appliance giant Qingdao Haier.

But the market won’t be open to just anyone, according to an official from the Shanghai Stock Exchange. He said companies wishing to issue so-called D-shares on the CEINEX should be either involved in advanced manufacturing or in projects related to the “Belt and Road” initiative — President Xi Jinping’s initiative to strengthen trade ties with countries in Asia, Africa and Europe, primarily through infrastructure investment and construction.

Other requirements include having a clear strategy for internationalization, high-quality information disclosure, existing arrangements for doing business in Europe, and a policy of paying dividends, he said.

Given the similar ambitions and approaches of Germany and China to upgrading their manufacturing industries, Frankfurt is in some respects an appropriate choice for the new exchange.

The March newsletter of the CEINEX said one of the key aims of the exchange is to strengthen connections between “Made in China 2025” — a strategy announced in 2015 to upgrade the country’s industrial structure and dominate strategic sectors, including robotics, biotech, and new materials – and Germany’s “Industry 4.0” plan — an initiative launched in 2011 to push forward digital, or “smart,” manufacturing.

Internationalization of the yuan is another key goal of the exchange, according to the CEINEX website, which has a video calling on potential investors to “join the RMB community.” Shares on the CEINEX are currently traded in euros, but the exchange is researching the possibility of allowing trades in yuan, an insider with knowledge of the matter previously told Caixin. Germany’s central bank said in January that it planned to include the yuan in its own reserves.

Frankfurt is just the second overseas stock market where Chinese companies can have dual listings alongside their mainland listed yuan-denominated shares, known as A-shares. The other is in Hong Kong, where the stocks are known as H-shares. Regulators are currently considering whether to allow Chinese companies to simultaneously issue A-shares and D-shares, Caixin has learned.

Contact reporter Ke Baili at gabriel@caixin.com

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