Frankfurt-based China Europe International Exchange announced on Monday that it will launch a new share market in 2018 to help Chinese companies raise funds for expansion in Europe and economies involved in the China-proposed Belt and Road Initiative.
The so-called D-share market will help blue chip Chinese smart and advanced manufacturing companies raise funds from European investors and strengthen their visibility and branding in Europe by raising investor awareness.
The funds raised by Chinese companies from their Frankfurt listings can then be directly used for their overseas expansion and acquisition activities. Their fast overseas expansion plans are also expected to generate attractive returns for European investors.
"Chinese companies are going out for international business, seeking partners globally. This creates the need for more diversified financial services," said Chen Han, co-CEO of the exchange, which uses the acronym CEINEX.
"Banks, intermediaries and other financial services shall develop multiple financial connectivity levels to serve the real economy. CEINEX brings these participants from finance and the real economy together and develops innovative products to support them," Chen said.
A spokesman for CEINEX said several Chinese companies are now in the pipeline preparing for D-share listings. Trading could begin in early 2018.
The D-share market launch announcement comes at a time of growing overseas investors' interest in buying Chinese shares, following the US index provider MSCI's decision to include China's A-shares in its emerging markets index starting June next year. Funds tracking the MSCI index as a benchmark are expected to buy more Chinese stocks.
Companies seeking D-share listing must be already listed on China's A-share markets. CEINEX has not imposed minimum requirements on the companies' scale or trading history, but will vet the companies seeking listings to ensure they satisfy Deutsche Borse's reliability and transparency of information requirements.
The trading of the D-shares is open to all investors who have accounts with Deutsche Borse. The D-share market will be operated as a part of the Deutsche Borse main board and be traded within the Frankfurt time zone.
CEINEX is a joint venture between Deutsche Borse, the Shanghai Stock Exchange and the China Financial Futures Exchange and was established in 2015 with support from the governments of both China and Germany.
Currently, it lists 65 bonds and 15 exchange-traded products, all of which include underlying China-related assets. These products give investors valuable exposure to China's vast capital market opportunities.