The Financial Supervisory Commission (FSC) yesterday downplayed the ramifications of Hon Hai Precision Industry Co’s (鴻海精密) decision to list a subsidiary on the Shanghai Stock Exchange and its speedy approval by Chinese regulators.
The China Securities Regulatory Commission on Sunday announced that it would begin reviewing the listing application of the subsidiary, Foxconn Industrial Internet Co (FII, 富士康工業互聯網).
However, the Chinese commission yesterday approved the application — less than 60 days after Hon Hai Precision’s shareholders in January gave the green light to the listing plan.
FII, with paid-in capital of 17.72 billion yuan (US$2.8 billion), is to hold its A-share initial public offering next month.
The company gained fast-track approval in China as part of Beijing’s plans to promote “unicorn” companies in new economy sectors, such as biotechnology, cloud computing, artificial intelligence and high-end manufacturing, the FSC said.
Beijing is not explicitly aiming to poach Taiwan’s top enterprises to its capital markets, the FSC said.
FII, which is registered in China, is not eligible to seek listing in Taiwan, it said, adding that as of the September quarter last year, it earnings represented only 0.5 percent of Hon Hai’s bottom line.
Under tight capital controls imposed by Beijing, Taiwanese subsidiaries based in China can reduce the strain on their parent companies by seeking funding from the Chinese capital market, the FSC said.
While the Chinese market is significantly larger and has more attractive price-to-earnings valuation, Taiwan’s market offers more transparency and lenient capital controls, it said.
The FSC said it has instructed the Taiwan Stock Exchange and the Taipei Exchange to seek opportunities in China and Southeast Asia, as well as to devise alternative listing standards for local businesses.
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