President Choi Kyung-soo of the KRX, R, holds the MOU with Gov. Tian Guoli of Bank of 

China after signing the instrument at a ceremony held at Coex in Seoul on July 4.  (Photo: KRX)

KRX President Choi Kyung-soo and Gov. Tian Guoli of the Bank of China (BOC) signed an MOU for comprehensive cooperation with on July 4 during Chinese President Xi Jinping’s state visit to Korea July 3-4.

The two state-owned banks agreed to cooperate on such matters as the expansion of the yuan currency market in Korea, including the listing of shares priced in yuan and a joint study on new shares priced in yuan and cooperation on boosting the understanding of the KRX and the financial market in Korea on the part of BOC employees in the future.

The two banks also agreed to help each other to assist Chinese business firms that want to list their shares on the KRX by holding sessions to explain how to go about listing their shares.

The BOC, established in 1912, is the first bank set up in China and one of the five largest with the primary function being to take care of the foreign exchange business for the People’s Bank of China, the Chinese central bank.

Its net assets are the 7th largest among banks in the world at 13.9 trillion yuan, with total debts running to 12.9 trillion yuan as of July 1, 2014 according to The Banker. Its net profit amounted to 2,116.9 million yuan last year.

The BOC employs 305,675 officers and staff with 11,485 branches in China and overseas.

Chinese firms that want to list their shares on the KRX may have to take more time to make their moves due to the Wonyang Resources incident, which may result in China’s risk level emerging as a big issue in global financial circles for the first time since 2011 when the accounting fiasco broke out. 

According to the securities industry on July 21, a number of Chinese firms including Hwaichan Cosmetics, wanted to submit for review its application papers for listing on the KRX, but the company may have to delay the move due to the Wonyang Resources incident. Woori Investment and Securities, the manager for the Chinese firm, said it is concerned that the Wonyang Resources incident may hurt other Chinese firms’ financial reputation, especially in their initial public offerings and, therefore, the underwriter plans to conduct thorough checks on their financials to remove any doubts in the minds of potential investors of those firms’ financial integrity.

Shinhan Financial Investment, the manager for Chinese firm Honsong, a maker of toys in China, will make sure that the toy maker is different from other Chinese firms through close cooperation with the Chinese firm before taking any actions with regard to its listing on the KRX.

KRX officials said they expect only two Chinese firms may able to list their shares on the stock market in Korea this year, while four Chinese firms may do so next year. 

A high-ranking KRX official said they will make sure that no Chinese firms with financial troubles will list their shares on the KRX through thorough screenings of their financials.

In the meantime, a lecture on investment strategies for the public subscription of shares held at the International Conference Room of the KRX drew some 400 participants despite the hot weather, showing how eager they are to invest in shares, with some of the participants ready to invest in any publicly subscribed shares that day. The fact that so many investors participated in the lecture held for the first time meant that they are eager to invest in high return shares in contrast to the continuously slow economic growth and low bank interest rates for a number of years.