ChiNext’s IPO reform to spur startup growth

AS China officially starts to pilot a registration-based initial public offering system on ChiNext, the country’s Nasdaq-style board of growth enterprises, innovative startups will enjoy more benefits from the capital market reform, the China Securities Journal reported yesterday, citing an analyst.

On June 12, China introduced a series of measures to replace the approval-based IPO system with a registrationbased structure.

Boosted by the reform, the ChiNext Index led the gains among other major indices, closing 1.84 percent higher at 2,260.46 points on Tuesday. The index gained a further 0.15 percent yesterday to close at 2,263.96 points.

The reform specifies the position of the ChiNext board, which is to mainly serve growth-oriented innovative and startup enterprises, support innovations in mode, service and format, and promote the in-depth integration of traditional industries with new ones. In comparison, the sci-tech innovation board, commonly known as the STAR market, is designed to support companies in the high-tech and strategic emerging sectors.

Noting the difference, the significance of ChiNext’s registration-based pilot reform lies in addressing greater financing problems of small and medium-sized enterprises, said Liang Hui, investment director at U Capital Corp, a private equity firm.

Besides, the reform has streamlined approval and registration procedures for listing on the ChiNext board and cut the whole process to less than three months.

Meanwhile, more than 56 percent of firms listed on the Shanghai Stock Exchange STAR Market have doubled their share price since the market’s debut a year ago, Shanghai Daily learned yesterday.

In fact the booming development of the new technology board has helped the Shanghai bourse retain its leadership on IPO funds raised globally, Deloitte said in a report.

By June 15, the first anniversary of the STAR Market, 110 firms had listed on the tech board with 1.7 trillion yuan (US$243 billion) in market value. Among them, share prices of 62 firms, amounting to 56.4 percent of the total, have more than doubled while 15 firms have tripled their share price, according to data provider Wind.

A total of 46 firms had a market value of over 10 billion yuan, including two firms valued at over 100 billion yuan, Wind data revealed.

By yesterday, a total of 345 firms had applied for listing on the STAR Market, including Semiconductor Manufacture International Corp, mainland China’s biggest chip maker.

SMIC, already listed in Hong Kong, plans to raise 20 billion yuan on the STAR Market, making it the top money-raising firm on the board.

More overseas listed firms will seek domestic or secondary listing on the STAR Market, with relatively high valuations, policy support and sufficient capital, analysts said.

Helped by the large number of listings on the STAR Market, the SSE sustained its global leadership in IPO funds raised in the first half of the year, surpassing the New York Stock Exchange and Nasdaq once again, Deloitte said.

(Shanghai Daily/Xinhua)