HK market to allow depository receipts for the first time

The exchange said in a statement the July launch of Hong Kong depository receipts, or HDRs, is targeted at foreign companies whose local regulators don't allow them to list shares directly on overseas stock exchanges.

The South China Morning Post reported Friday the plan also comes as the Hong Kong market faces increasing competition from Chinese stock markets.

"The depository receipt scheme will diversify the source of listed companies in Hong Kong and strengthen our position as an international financial center," the Post quoted Hong Kong stock exchange chairman Ronald Arculli as saying.

Arculli said the plan will likely draw companies from Russia, Vietnam, India, Kazakhstan and the Middle East, according to the report.

HDRs will work in a similar way to American Depository Receipts, the Post reported.

ADRs represent shares of foreign companies traded on U.S. markets that allow American investors to get exposure to foreign stocks without actually investing in overseas markets. ADRs are issued by U.S. banks that hold a receipt of the foreign company's shares in their vaults.

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