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China is considering creating an alternative to New York's Wall Street stock exchange to attract companies currently listed on foreign stock exchange platforms.
The British news agency Reuters, citing two sources familiar with the matter, reported on Wednesday that Chinese authorities "are studying the possibility of creating a stock exchange to attract companies listed abroad and strengthen the international positioning of their domestic stock markets."
According to the source, China's State Council has commissioned the top securities regulator to prepare a study on organizing a stock exchange that would target Chinese companies listed in markets, such as those in Hong Kong and the United States.
Besides, the Chinese government hopes the initiative will attract multinational companies, such as Apple and Tesla, to register their local divisions on the new exchange.
These plans follow threats by U.S. regulators to expel certain Chinese companies from U.S. exchanges.
The U.S. Securities and Exchange Commission. (SEC) has already begun implementing a law passed at the end of former US President Donald Trump's term that allows the country's regulators to expel foreign companies from US stock exchanges if they cannot prove they are not owned or controlled by a government entity in a foreign jurisdiction.
The companies will also have to indicate which board members are Chinese Communist Party officials if any.
China is considering establishing a stock exchange to attract overseas-listed firms and bolster the global status of its onshore share markets, two people with knowledge of the matter told Reuters.
With relations between China and the U.S. not seeming to improve, bankers and investors expect more of these "come home" deals.
Both Washington and Beijing remain tense on several issues, including trade, technological competition, and the pandemic of the new coronavirus, which caused COVID-19, and issues related to Taiwan and Hong Kong, among others. These tensions have brought the two countries to the brink of a new cold war.
This comes at a time when, according to Refinitiv data, some 13 Chinese companies listed on U.S. exchanges, including Alibaba Group Holding Ltd., Baidu Inc., and JD.com Inc., have made secondary listings totaling $36 billion on the Hong Kong exchange in the past 16 months.
At such a juncture, according to sources on condition of anonymity, one of the options under discussion is to upgrade an existing listing platform, such as a smaller exchange based in Beijing, the Chinese capital, which the Beijing municipal government has been seeking for years.