Beijing wants ports with dual listing plans for Shanghai and Hong Kong to make it work in Shanghai first.
If a company lists in Shanghai, it can expect to be valued at more than 30 percent higher than if it went public on the Hong Kong Exchange.
That’s an attractive proposition for mainland companies, especially considering that the pesky regulatory requirements of listing in Hong Kong are far stricter than those in Shanghai.
Late last month, a Ningbo Port executive said its listing application for the Shanghai bourse was pending approval, with a Hong Kong listing somewhere down the road.
Of course, there is also the omnipresent pressure from Beijing for companies to list first in Shanghai before thinking of heading south for a Hong Kong listing. It’s hard to increase the valuation of your stock market when everyone is selling shares somewhere else in another currency.
Ningbo would understand vested political interest all too well having been hit by the blunt instrument of the state several years ago. It has a fine natural deepwater port not far south of Shanghai and made a powerful case for being nominated the shipping hub of central China.
But Shanghai came first and instead of expanding an existing port with all the room and connectivity needed for a hub, the municipal government received the go-ahead to build Yangshan Deepwater Port on two islands 32km off the mainland.
Despite being “Shanghaied” into accepting second fiddle, the industrious port of Ningbo had something to prove and this decade it has been the fastest growing port in China, currently number eight in the world in container throughput. Bulk throughput is arguably where its future lies and with the capacity to handle huge amounts of steel and iron ore, plus a new oil terminal, the port will prove attractive to investors.
Attractive enough to raise US$1.5 billion from the Shanghai listing? Who knows. But with booming rail and property sectors driving the import of commodities on the mainland it looks like a good bet.
So far none of China’s ports have managed a dual listing in Shanghai and Hong Kong. Of them all, only Dalian Port is listed on the HKEx and it has plans to go public on Shanghai’s A-share market next year.