China to set up stock-trad­ing venue for high-tech firms

Gulf Times Business - - BUSINESS -

China will set up a new trad­ing venue in Shang­hai that will make it eas­ier for high- tech com­pa­nies to ac­cess fund­ing, as Pres­i­dent Xi Jin­ping vows more open­ing mea­sures to boost the world’s sec­ond­largest econ­omy.

The Shang­hai Stock Ex­change will also start a pi­lot pro­gramme on a reg­is­tra­tionbased sys­tem of ini­tial pub­lic of­fer­ings, Xi said at the China In­ter­na­tional Im­port Expo, with­out elab­o­rat­ing on ei­ther ini­tia­tive.

China is ex­pand­ing ef­forts to keep its most promis­ing com­pa­nies from go­ing pub­lic in Hong Kong or the US Of­fi­cials were study­ing a pos­si­ble new trad­ing venue in Shang­hai that would have lower thresh­olds for biotech­nol­ogy and high­tech firms, peo­ple with knowl­edge of the mat­ter said in June.

The new mar­ket, which might waive earn­ings and rev­enue re­quire­ments, would op­er­ate at the Shang­hai Stock Ex­change, and could open as early as next year, the peo­ple said at the time.

“There was lit­tle or no an­tic­i­pa­tion of some­thing like this, and so the re­ac­tion in the com­mu­nity so far is quite muted or calm,” said Tom Wang, port­fo­lio man­ager at Shen­zhen Qian­hai You­joy Cap­i­tal Man­age­ment. “There are no de­tails on the sup­port­ing poli­cies, but to take it at face value, it may mean al­low­ing loss- mak­ing com­pa­nies to go pub­lic.” The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion will move ahead with a trial for the high­tech- fo­cused venue at a mea­sured pace, and will en­cour­age smaller in­vestors to par­tic­i­pate via mu­tual funds, ac­cord­ing to a state­ment from the reg­u­la­tor af­ter Xi’s speech.

Com­pa­nies seek­ing to list will be sub­ject to dif­fer­ent prof­itabil­ity and own­er­ship re­quire­ments com­pared with the ex­ist­ing stock ex­changes, the CSRC said. Pol­icy mak­ers are look­ing at ways to boost China’s stock mar­ket, which in re­cent years has seen busi­nesses worth more than $ 1tn go pub­lic on over­seas ex­changes. Reg­u­la­tors have drawn up rules for Chi­nese de­posi­tary re­ceipts that would al­low com­pa­nies such as Alibaba Group Hold­ing to list shares do­mes­ti­cally, and ef­forts are un­der­way to en­cour­age home­grown large tech firms, known as uni­corns, to de­but on ex­ist­ing venues in Shang­hai or Shen­zhen.

Biotech firms with­out a track record of rev­enue or prof­its can list in Hong Kong un­der rules that took ef­fect in April, part of a broader ef­fort by Hong Kong Ex­changes & Clear­ing to at­tract tech­nol­ogy- fo­cused firms and com­pete head- to- head with US mar­kets for ini­tial pub­lic of­fer­ings.

“In my decades trad­ing in China’s stock mar­ket, there’s a new board every three- to- five years,” Hou Anyang, fund man­ager at Frontsea As­set Man­age­ment in Shen­zhen. “There’s noth­ing spe­cial about this.”

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