New board for technology companies to be set up in Shanghai
January 29, 2019 Category China News Round-up, Weekly
China approved a plan to set up a Nasdaq-style board for technology companies in Shanghai, aimed at improving their ability to raise funds. President Xi Jinping chaired the sixth meeting of the Central Committee for Deepening Overall Reform, during which plans to launch a science and technology innovation board at the Shanghai Stock Exchange were approved. A plan to implement a pilot registration-based initial public offering (IPO) system for the new board was also approved at the meeting. Xi first announced a plan for the board in November when attending the China International Import Expo (CIIE) in Shanghai. The move to launch the science and technology innovation board and experiment with the registration-based IPO system is a significant measure to implement the innovation-driven development strategy and deepen capital market reform, according to a statement released after the meeting, the Shanghai Daily reports.
Meanwhile, the Chairman of the China Securities Regulatory Commission (CSRC), Liu Shiyu, has been replaced by the former Chairman of the Industrial and Commercial Bank of China (ICBC) Yi Huiman. Liu had been in charge of the CSRC since February 2016, while Yi had been Chairman of ICBC since 2016. When Liu Shiyu joined the CSRC, China’s stock market was in turmoil. The Shanghai Composite Index, its primary gauge, was down almost 50% from its peak eight months earlier and scandals were rife. He launched a series of investigations in a bid to snare high-powered financiers who pocketed billions by manipulating the market. But now Liu seems to have been fallen out of favor for being too conservative and for his excessive oversight of the market which has led to a significant drop in market activity. His successor Yi Huiman is expected to further open up the stock market and loosen the restrictions on derivative products. The most uphill task facing Yi will be to restore confidence in what was the world’s worst-performing equity market in 2018.
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