NASDAQ-style tech board launched
June 18, 2019 Category Stock Markets, Weekly
From left: China Securities Regulatory Commission Chairman Yi Huiman, Chinese Vice Premier Liu He, Shanghai Party Secretary Li Qiang and Shanghai Mayor Ying Yong, celebrate the launch of the SSE STAR Market
Chinese securities regulators launched a NASDAQ-style sci-tech innovation board, a breakthrough that experts said is aimed at promoting the country’s technological power and supporting efforts by domestic companies in research and innovation amid the U.S. suppression of China’s technological development. The launch also highlights China’s resolve to further develop and invest in core technologies. The new board is known by its English name – STAR Market – in the hope that it will become a rising star in the country’s financial markets. The STAR Market will try a registration-based IPO system and will allow companies that have yet to make a profit to get listed, as in the case of NASDAQ.
To show the importance the central government attaches to the new tech board, Vice Premier Liu He attended the launch on June 13 at the Lujiazui Forum in Shanghai, with Yi Huiman, Chairman of the China Securities Regulatory Commission (CSRC), Secretary of the Shanghai Municipal Committee of the Chinese Communist Party Li Qiang and Shanghai Mayor Ying Yong. In his keynote speech, Liu stressed that the two priorities for the new board are registration-based IPO reform, with information disclosure at its center, and enhancing the rule of law by raising penalties for violations and strengthening supervision and law enforcement.
Yi cited two reasons for the launch of the STAR Market and the piloted registration-based listing system. The first is to support the development and growth of science and technology companies with development potential and high market acceptance. The second is to use the board as a test for reforms, which could be implemented on other boards. So far, 122 companies have applied for listing on the board. “It’s time to further open China’s capital market, and the opening-up will be made notwithstanding the trade war with the U.S.,” said Dong Dengxin, Director of the Finance and Securities Institute at Wuhan University of Science and Technology.
Trading on the STAR market is expected to start within two months. Meanwhile, a stock connect program linking the London and Shanghai markets has been launched, after both sides worked out the regulatory framework and cross-border trading rules. Huatai Securities, one of China’s largest brokerages, announced plans to raise USD1.2 billion through the London Stock Exchange. It will become the first Chinese company to sell shares in London.
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