THE head of Morgan Stanley’s China securities business proposed the setting up of an international board in China to allow offshore-listed Chinese companies and foreign firms to list in the domestic market.

Jing Qian, CEO of Morgan Stanley Securities (China), also told Shanghai Securities News in an interview that China should consider lowering the profitability threshold for initial public offerings (IPOs) by tech companies and startups.

The proposal comes as a growing number of U.S.-traded Chinese mainland companies conduct secondary listings in Hong Kong.

The Shanghai Stock Exchange prepared for the setting-up of an international board more than a decade ago to attract listings by such multinationals as HSBC but the plan never materialized.

As China further opens up its capital markets, calls are getting louder for it to establish an international board, Qian said in the interview.

Allowing quality global companies to list in China can help introduce competition, expand investment channels for domestic investors and increase the international appeal of China’s stock market, Qian was quoted by the newspaper as saying.

As China expands IPO reforms, regulators can first allow domestic public share sales by offshore-listed companies before giving the go-ahead to international companies, she said.

Although China has allowed domestic listings of so-called red-chip companies — offshore incorporated firms with businesses mainly on the Chinese mainland — the bar was too high, Qian said. Rough half of Hong Kong-listed red chips were not eligible for a mainland listing.

Common difficulties are complex approval processes and inadequate market capitalization.

Qian also suggested China relax profitability requirements under its registration-based IPO system, so as to allow more pre-profit companies to list on Shanghai’s tech-focused STAR Market and the Shenzhen startup board ChiNext.

(SD-Agencies)