London Seeks Chinese Listings Amid Shrinking Equity Market

London is actively pursuing more Chinese companies to list on its stock exchange as the city faces a shrinking equity market and a scarcity of new listings across Europe. Chris Hayward, policy chairman of the City of London Corp., emphasized the need for more initial public offerings (IPOs) in London, stating, "We don’t want to lose business across the Atlantic."

The City of London Corp. aims to provide opportunities for Chinese firms to secure customers and funding in the UK and drive them to list in the city via its connect scheme with Shanghai. This scheme allows listed companies to issue depository receipts on each other’s exchanges. The program, introduced in 2019, has seen limited success, with only a handful of Chinese firms, including Huatai Securities Co., listing in London and raising a total of $6.6 billion. Trading has been muted, and the program has yet to reach its full potential.

Beijing and London have vowed to deepen economic and financial ties, with a focus on boosting the China-U.K. stock connect program. Hayward, who was in Shanghai for China’s annual financial forum, is traveling to Hong Kong for IPO discussions. Hong Kong’s share-sale bonanza this year saw new listings and additional offerings fetch more than $27 billion as of early June, eclipsing annual totals in the last three years. In contrast, London has had just four pending or trading IPOs this year, with its valuation discount to the rest of the world discouraging firms.

London, as a key offshore yuan center, has been working with China’s central bank to promote the internationalization of its currency. The city established a working group with the People’s Bank of China in 2018 to monitor the yuan market in the UK capital. The authority has been pushing global asset managers in the city to issue new products in yuan to facilitate greater use of the currency.

Hayward downplayed the potential impact of the UK’s recent tax for wealthy non-domiciled residents on London’s appeal as a global financial center. However, he urged efforts to resolve the non-dom issue, stating, "It’s important to us to try and keep wealth creators in this country."

London's efforts to attract Chinese listings come as the city faces domestic headwinds, including recent tax changes affecting wealthy non-domiciled residents and tighter immigration policies. The UK Treasury is trying to persuade major local fintechs to consider going public at home, as London has been missing blockbuster tech listings for years. The London market's valuation discount compared to other global exchanges has also made it less attractive for companies considering where to list their shares.

As Hayward heads to Hong Kong for IPO discussions, the pressure is on to find ways to reverse London's fortunes and reclaim its position as a premier destination for global capital raising. The city's efforts to attract more Chinese listings and strengthen its position as an offshore yuan trading center are part of a broader strategy to revitalize its equity market and compete with other global financial centers.