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APX the next step in cross-border investment

Source: Australian Financial Review   By: James Dunn 

George Wang, head of AIMS Financial Group, which owns APX . . . ‘We’ve designed a bilingual process that is suitable for Chinese companies and allows them to list relatively easily.’

This content is produced by The Australian Financial Review in commercial partnership with Westpac Institutional Bank.

Stronger ties between Australia and China are paving the way for Australia’s Sydney-based Asia Pacific Stock Exchange (APX), which offers Chinese companies an alternative listing venue to the Shanghai and Shenzhen stock exchanges in China.

George Wang, chief executive of AIMS Financial Group, which owns APX, says the “promising development” of Sydney as a renminbi hub, the recently signed free-trade agreement between Australia and China, and the straight-through convertibility in Australia are “very important” to the exchange’s plans. “Our whole strategy is based around developing capital, knowledge and investment flows between Australia and China, so it’s very good timing for us.”

Trading in the first two APX-listed companies – both from Shenzhen in China – kicked off in March. These were Australia Samly Holdings, which distributes vitamins, and ZhongHuanYun Holdings, which makes packaging products and offers logistics solutions.

Wang says APX has been developing its suite of broker “market participants” – it now has BBY, Phillip Capital, CMC, Patersons, Pershing, Canaccord and State One on board – as well as a group of leading law firms, including Minter Ellison, HWL Ebsworth and K&L Gates, as sponsors.

A big year for APX

Westpac also sees the opportunity to support APX with the foreign exchange conversions as investment flows from mainland China continue to grow. With about 30 companies in the pipeline to list on APX, he expects 2015 to be a big year for the exchange.

Andrew Whitford, Westpac’s head of Greater China, sees this sort of exchange as the natural next step for China-Australia cross-border investment. “China is on an incredible ­liberalisation journey as it continues to open its financial system to the rest of the world. This means it will only get easier to do business and invest across both countries.

“APX have come in at the beginning of this, providing a cultural bridge to attract the first movers,” he said.

“We’ve been building our network among Chinese companies for a long time. The thing about Chinese companies is that while about 4000 of them are listed in Shanghai and Shenzhen, Hong Kong and the USA, about 14 million companies are not listed. That is our target market,” Wang says. “It’s actually pretty hard to list in Shanghai and Shenzhen, to get approval. We feel we can attract Chinese companies to list in Australia because we’ve designed a bilingual process that is suitable for Chinese companies and allows them to list relatively easily.”

Anticipating further development of Sydney as an RMB trading hub, APX is also planning to accept trades in both Australian dollars and renminbi. While the Australian Securities Exchange requires 400 shareholders before a float, APX requires only 50 – making it easier to list there if a smaller amount of money is sought.

Owing to its strong links with China, Wang says APX sees itself as the natural Australian stock exchange for RMB-denominated trading in Chinese stocks. “We’ve promoted Australia in China for many years now. They see Australia as a good spot, it is very stable and it has a good governance system.

“We think our niche is in China-based companies seeking capital, market opportunities, or listing in Australia, but we also want to attract Australia-based companies seeking capital or other market opportunities in China.”

Beyond Chinese investors looking to expand their portfolios overseas, Wang is hoping to attract a variety of investors including Australia.

“We think interest here will continue to build as people look for China-focused growth opportunities, operating within well-understood governance structures,” he says. source: