Overseas Stakes in Three Listed Firms Approach Limit
What’s new: Overseas holdings in three Shenzhen-listed companies — namely Midea Group Co. Ltd., Centre Testing International Group Co. Ltd. and Suofeiya Home Collection Co. Ltd. — have reached 26% of their total shares, triggering alerts as the percentages come closer to the 30% limit.
As of Tuesday, the percentages of shares held overseas of Midea Group, Centre Testing and Suofeiya were 27.28%, 26.23% and 26.77%, respectively, according to data (link in Chinese) from the Shenzhen Stock Exchange.
What’s the background: Overseas shareholdings of any A-share listed company should not exceed 30% of the company’s total shares, according to securities regulations.
On Monday, Suofeiya, a furniture-maker, saw the percentage of its shares owned by overseas investors exceed the 26% level which triggers an alert. Appliance-maker Midea Group and testing services provider Centre Testing have occasionally had 26% of their total shares held by overseas entities since last year.
Currently, overseas investors have several ways to invest in China’s stock market, including stock connect programs linking Hong Kong and the Chinese mainland, as well as the Qualified Foreign Institutional Investor program and its sibling the RMB Qualified Foreign Institutional Investor program — widely known as QFII and RQFII. China will scrap quota limits on the QFII and RQFII programs starting early next month.
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