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31.
On the local capital market, in May the Bank of Communications issued with warrants attached worth HK$200 million bonds. These warrants give bondholders the right to buy shares in Hong Kong Telecommunications Ltd., the biggest company listed on the Hong Kong Stock Exchange, from the Bank at a price of $10 each before March 1993. (The market price for each share of Hong Kong Telecom was around $6.8 at end-July.) Response to this equity warrant bond, the first of its kind in Hong Kong, was reported to
be favourable.
32.
There are indications that China-interest firms may make increasing use of Hong Kong's stock market to obtain funds. For example, Yue Xiu Enterprises announced in June its intention of floating three subsidiaries : Asia Standard Development Holdings (a real estate investment company), Yue Xiu Finance Co. and Yue Xiu Property Development Co. The former is scheduled for listing within the next two months and the proceeeds will be used for property development in Hong Kong. The time-table for flotation of the other two subsidiaries has
yet to be fixed.
33.
So far, listing of China-interest firms has mainly been accomplished through acquiring shell companies or through the flotation of subsidiaries. As for those enterprises directly under state control, listing is probably much more difficult. State approval has to be obtained beforehand, as the move will imply the transfer of part of the ownership to the shareholders. The need to adopt the accounting practices and disclosure standards required by the Hong Kong Stock Exchange also poses
technical problems.
G.F. 326
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