From Breakingviews - China-Swiss stock link has flimsy foundations
If Chinese regulators tighten the approval process for companies seeking to issue GDRs and scrutinise participating investors, they might weed out companies which have little interest in attracting new shareholders. A clampdown on the cross-border arbitrage could also help ease selling pressure on Chinese stocks that usually occurs when investors convert their GDRs.
Even so, the fundamental problem remains: international investors have little interest in buying Chinese shares on European exchanges, given there are many ways to directly trade stocks, including CATL’s, in more liquid markets in Shanghai and Shenzhen. A similar scheme to allow mainland firms to list in London floundered in part due to dismal liquidity. Zurich and other European bourses hoping to lure Chinese listings look destined to suffer the same fate.
Policymakers are concerned that GDR issuances could lead to "significant downward pressure on China's stock market", according to the report. Separately, plans by Chinese battery maker Contemporary Amperex Technology to raise at least $5 billion by selling Swiss GDRs have been delayed as Chinese regulators raise concerns over the large scale of the offering, Reuters reported on March 14, citing sources.
Since the launch of a China-Swiss stock scheme in 2022, 11 Chinese companies have raised a combined $3.6 billion, according to data from Dealogic.
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