The Luxembourg Stock Exchange on Thursday said it has admitted the UK arm of China International Capital Corporation as a new trading and listing member with immediate effect. CICC will enable the indirect trading of shares listed on Shanghai the Shenzen stock exchanges via the Luxembourg bourse.
As part of its new status as a trading and listing member, CICC, a partially state-owned Chinese investment bank, aims to strengthen its international presence by enabling the trading and listing of Global Depositary Receipts, or GDRs, “as well as bridging the gap between China and international investors,” a LuxSE statement said.
By opening its doors to CICC, the Luxembourg bourse becomes the second stock market in the EU where Chinese GDRs can be traded. A spokesman for LuxSE said approximately a hundred GDRs now are available for trading. CICC already has similar arrangements with exchanges in the UK, Switzerland and Frankfurt.
GDRs are similar to American depositary receipts, known as ADRs, which have enabled European and other non-US companies to have shares listed indirectly on US stock exchanges. GDRs are available outside China on Chinese A-shares, which are stocks of mainland China-based companies that trade on the two Chinese stock exchanges in Shanghai and Shenzhen. Stocks linked to GDRs are separated from the others that are traded in China and are deposited in China. They are listed in yuan. In Europe, Chinese GDR certificates are already traded via UK and Swiss exchanges, among others.
‘Ongoing journey’
In a statement, LuxSE chief executive Julie Becker (photo) said CICC’s membership will support cross-border investment activities between China and the international investor community, particularly in regard to the listing and trading of Global Depositary Receipts.
“It will enable us to better connect the capital markets and investors between China, Luxembourg and Europe. This is another key milestone in CICC’s ongoing journey of strengthening its presence in Europe and globally,” said Xinhan Xia, CEO of CICC UK, the UK arm that becomes the formal, legal vehicle for the Chinese firm’s LuxSE membership.
CICC was founded in China in 1995. CICC UK was established in 2009 and is regulated by the UK Financial Conduct Authority. It provides a central platform from which CICC facilitates cross-border investment and financing services for an increasing number of clients from Europe, the Middle East and Africa that do business with China and from China seeking cross-border investments in and financing from these regions.