Applications start for new tech board
The Shanghai Stock Exchange began to receive IPO applications for the science and technology innovation board on Monday, signaling that the first group of offerings may be seen in June, analysts said.
They expect the new submarket, marking a key reform of the capital market, to better leverage the market’s role in financing technological innovation.
The Shanghai bourse launched a website on Monday to disclose its progress in reviewing initial public offering applications for the new board, kicking off the IPO application and review process. No application information had been released as of the market’s close.
As of Monday, at least two companies — mobile phone maker Transsion Holdings and integrated circuit manufacturer Yantai Raytron Technology Co — have completed training to prepare an IPO on the new board, according to local securities authorities’ websites.
That means the two companies can now prepare and file IPO application documents with the Shanghai bourse for review. Companies that pass the review can then register at the China Securities Regulatory Commission and go public on the new board.
Wang Yi, chief strategist at Great Wall Securities, based in Shenzhen, Guangdong province, said he expects the first group of companies to go public on the new board by early July.
“The new board’s review process will be very different from existing submarkets of the A-share market because it will include the IPO registration system,” said Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology.
President Xi Jinping announced in early November that China would launch the new board at the Shanghai bourse and test a registration system.
The goal of the registration system is to enable companies to go public whenever they satisfy the IPO standards and file application documents, Dong said. “Therefore, the regulatory review of IPO application documents aims to ensure the authenticity, completeness and adequacy of their information disclosure. With adequate and accurate information, the registration system will empower the market to decide the value of the listed companies.”
There is a basic difference in the approval system used by other A-share submarkets.
“During the review process of the approval system — where regulators decide whether a company can be listed — regulators actually judge the investment value of companies filing IPO applications,” Dong said.
Liu Junhai, director of the Business Law Centre at Renmin University of China, said, “With the extended role of the market and IPO standards friendly to tech innovation, the new board could allocate financing resources to tech enterprises more efficiently than other submarkets.”
Also, the new board will spur tech innovation by breaking the ice for capital market reforms and encouraging more companies to strengthen research and development, Liu said.
Li Qiang, Party secretary of Shanghai, said Shanghai should leverage the new board’s role in strengthening financial services’ capacity to serve tech innovation. “We should focus on integrated circuits, artificial intelligence, biomedicine and other key areas,” Li said on Saturday.
On the same day, the Shanghai bourse held a meeting with nearly 100 investment banks, mainly to urge them to meet their obligations to make comprehensive preparations for the launch of the new board, especially regarding risk prevention.
“The registration system has also called for more effort by market intermediaries — particularly investment banks — to ensure the quality of information disclosure of companies applying for IPOs on the new board,” Dong said. “Noncompliance in information disclosure is the biggest potential risk of the new board.”