Speculation over the opening of an international board in the China (Shanghai) Pilot Free Trade Zone, although denied by the Shanghai Stock Exchange, has taken on a new twist, with a published report saying that foreign companies might be able to sell shares in the zone.

A source with direct knowledge of the matter was quoted by The Wall Street Journal as saying that the authorities are working on a proposal to enable qualified foreign companies registered in the FTZ to sell shares via initial public offerings, ahead of listings on a designated trading platform in the zone.

The Shanghai Equity Exchange, in which the Shanghai Stock Exchange holds a 29-percent stake, plans to develop a platform to enable foreign companies registered in the FTZ to sell shares, according to The Wall Street Journal. But no time frame has been specified.

The Shanghai Equity Exchange, the city's only over-the-counter market for unlisted companies, opened last year to help technology companies and small companies raise capital.

Without responding directly to the possibility of setting up such a platform, Zhang Yunfeng, general manager of the Shanghai Equity Exchange, was quoted by Shanghai-based financial information provider AAStocks.com Ltd as saying that the exchange has set up an FTZ team to study the task, as directed by local authorities.

Zhang also reportedly said that the exchange is focusing on the possibility of the full convertibility of the yuan.

The proposed platform to allow foreign companies to issue shares is seen as a test for the Shanghai Stock Exchange's international board.

Over the years, Shanghai has lobbied the national government for permission to allow foreign companies to list on the exchange, as part of its ambition to become an international financial center.

But in a statement on Tuesday night via Sina.com.cn, Zhang denied that there was any FTZ team studying the possibility of an international board.

The Shanghai Stock Exchange last Thursday also denied the possibility of opening an international board in the FTZ, saying there is no timetable for such a move.

"There might be such a platform established in the long term. But for the time being, the possibility is not that high," said Zhang Qi, a senior analyst at Haitong Securities Co Ltd.

For one thing, there must be a revision of the Securities Law to allow foreign companies to sell shares, the Haitong analyst said.

Further, foreign companies registered in China are qualified in theory to issue A shares. Therefore, there is no need for them to seek financing in the FTZ.

"The world's leading financial centers, including Hong Kong, New York and Tokyo, have such examples of international boards allowing foreign companies to issue stocks as a means of raising capitalization.

"But successful examples are rare, because transactions are not that active. In this sense, it does not help the companies to raise capital or seek profits in the market," Zhang Qi said.

shijing@chinadaily.com.cn