Unused exchange Deutsche Börse reviving Chinese trading platform in Frankfurt

A joint venture with the Shanghai exchange has languished since 2015 but Trump's new world order may provide renewed impetus.

Deutsche Börse is eager to breathe new life into its languishing Ceinex joint venture with the Shanghai Stock Exchange and beef up their shared stock exchange in Frankfurt into a real trading platform.

Ceinex was launched three years ago with considerable hoopla as a way to help open up Chinese capital markets and promote international use of the Chinese currency, the renminbi. But the exchange has been slow in the making, partly because of Beijing’s own ambivalence about the process.

Quelle: xinhua / FOTOFINDER.COM
This is the only IPO the Ceinix has hosted. Haier.
(Source: xinhua / FOTOFINDER.COM)

The resignation of 62-year-old Jianhong Wu, Ceinex executive board member for marketing, may create an impetus. He was replaced on the venture’s board by two young representatives from Deutsche Börse, 44-year-old Niels Tomm, appointed as co-chief executive, and 32-year-old Katrin Otto.

Trump, again

The current tensions between China and the US could lead to closer cooperation with Germany. One of Tomm’s ancillary duties as co-chief executive is to cultivate relations with Berlin. “Cooperation between China and Germany – due in part to geopolitical developments – should become closer in the next few years,” Tomm said.

The exchange, which is owned 40 percent each by Deutsche Börse and the Shanghai exchange and 20 percent by the China Financial Futures Exchange, was launched with some 200 ETFs and bond issues, for the most part short maturities that Deutsche Börse transferred to Ceinex for marketing purposes. But that has now has dwindled to just 16 ETFs and 40 bonds.

It only saw its first listing in October, washing machine producer Haier. Although the exchange had mulled listing state enterprises such as Petrochina, it soon realized that they carried too much baggage.

China created a new class of shares, the D-share, for trading in Germany. This complements the A-shares traded domestically and H-shares in Hong Kong, S-shares in Singapore and N-shares in New York. Another recent introduction on Ceinex was the first Euro-Green-Bond from the Agricultural Development Bank of China.

Size doesn’t matter

Tomm says Ceinex has more Chinese shares in the pipeline. Haier, which has its primary listing in Shanghai, raised €300 million in its Frankfurt listing. Trading represents about 0.4 percent of Haier’s public float. “That is a good value,” says Tomm, “comparable with many shares in the SDax and MDax,” Germany’s small- and mid-sized indexes, respectively.

Ceinex gives Chinese firms the opportunity to raise money in euros and to attract funds from European investors. A secondary listing in Germany can also help to raise a firm’s profile in Europe.

One possible way to expand the business would be to introduce derivatives based on renmibi or other Chinese shares, officials believe. However, a separate venture originally planned to accompany Ceinex – a platform for trading interest-rate and currency derivatives – has yet to materialize and insiders now believe it has been permanently shelved.

Bundesbank executive board member Burkhard Balz doesn’t think that should discourage Ceinex officials. After an initial burst of interest, China grew noticeably reserved about internationalizing the renminbi.

“However, the perspective now seems to be slowly improving,” said Balz.

Andreas Kröner has been a Handelsblatt financial correspondent in Frankfurt since 2017. Darrell Delamaide adapted this article in English. To contact the author: kroener@handelsblatt.com

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