Shanghai’s tech board approves first IPOs
June 11, 2019 Category China News Round-up, Weekly
The Shanghai Stock Exchange has granted approvals to the first three firms applying to raise funds on its new technology board, a major step towards the debut of China’s own Nasdaq-style exchange. Shenzhen ChipScreen Biosciences, Anji Microelectronics (Shanghai) and Suzhou Tztek Technology went through initial public offering (IPO) hearings less than three months after they submitted their applications. The short waiting time is the latest sign that Beijing is ramping up support for home-grown technology firms as the U.S.-China trade war escalates also in the tech sector. The three firms, which work in the fields of semiconductors, biotechnology and artificial intelligence (AI), are looking to raise a combined CNY2.1 billion. The planned IPOs are subject to final approval from the China Securities Regulatory Commission (CSRC) before they start book building, widely anticipated to take place in one month’s time.
“Solid firms that comply with the information disclosure rules will emerge to be the top beneficiaries of the new market,” said Ivan Li, Asset Manager with hedge fund Loyal Wealth Management. “The first batch of approvals will open a floodgate for dozens of promising start-ups to raise funds on the new board.” The official start of trading on the new board has not been announced but it is widely expected to be as early as July. Beijing hopes to create and nurture its own world-class players in chipmaking, biotechnology and other basic sciences that face the prospect of being strangled by the U.S., which accuses China of stealing its intellectual property. President Xi Jinping first announced plans for the new board in November and it has taken little more than half a year for the securities regulators to complete their preparations. The new board has adopted a registration-based IPO mechanism for the first time to facilitate companies’ fundraising. This means regulators do not assess the applicants’ earnings potential, instead letting the market decide their worth. Retail investors seeking access to the new board need to show that they have at least CNY500,000 in investment capital and two years of equity trading experience.
Former White House Adviser Steve Bannon, in a recent interview with the South China Morning Post, called for Chinese companies to be completely excluded from U.S. capital markets, declaring he would dedicate his time to making it happen, the South China Morning Post reports.
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