China’s largest shipping group, COSCO Shipping, is considering raising capital for the first time on the London Stock Exchange through a new initiative with Shanghai’s bourse, two finance sources familiar with the matter said.
Chinese container ship “Cosco Shipping Xin Hong Kong” is unloaded at a loading terminal in the port of Hamburg, Germany.(Reuters file)
The Shanghai-London Stock Connect will enable Chinese companies to raise fresh money on the LSE through issuing global depository receipts (GDR), which could boost momentum amid concerns that Brexit could dent the City of London’s leading position in financial markets.
The LSE is hoping to get a boost from China as the world’s fastest growing capital market.
The sources, who declined to identified citing sensitivity, said COSCO Shipping Holdings Co., which is Shanghai and Hong Kong listed, was examining the possibility of issuing GDRs in London. No decision had been taken yet, partly as it would also require Chinese regulatory approval.
“Any capital raising would be large to make it worthwhile and also to bolster connections with foreign investors,” one of the sources said.
The second source added: “For political reasons as well, London would be a preferable capital destination for COSCO rather than New York, for instance.”
COSCO, which has an estimated market capitalization in Shanghai of $5.5 billion, did not respond to requests for comment.
Developing a tie-up between Shanghai and London is the latest in a series of efforts by China to gradually bring its vast stock markets into the world trading system.
However, the arrest this week of a top executive of China’s Huawei Technologies Co. Ltd. in Canada and her possible extradition to the United States has roiled global stock markets on fears the move could escalate a trade war between Washington and Beijing after a truce was agreed days earlier between President Donald Trump and Xi Jinping.
COSCO, which is the world’s No. 3 container shipping line, is still contending with pressured markets and has been looking at expanding its activities globally.
Earlier this year it completed its $6.3- billion acquisition of Hong Kong’s Orient Overseas International Ltd. helping to strengthen its leading position in global shipping and also as China’s top sea transportation arm.
COSCO group acquired a 51 percent stake in Greece’s Piraeus port in 2016 and finance sources say the company has looked at other shipping assets in Europe since then.
One of the finance sources said Britain’s shipping minister Nusrat Ghani had held meetings with COSCO officials as part of efforts to boost trade between the UK and China.
A British official said Ghani met with a number of companies and partners during a visit to China earlier this year, declining further comment.
Source:Reuters
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