As China explores ways to have more of its own tech giants’ shares traded at home, investor interest in a Shenzhen-based Nasdaq-like market is finally returning.
Money is gushing into the ChiNext Composite Index, Reuters reported on Tuesday, with one exchange-traded fund tracking the start-up board seeing its assets under management jump 70% this year to US$1.39 billion. Other major ChiNext ETFs also saw heavy inflows.
Leaders are reportedly discussing policy changes to enable tech firms, including those now listed overseas, to be traded on Chinese exchanges, a move that could see Shanghai, Shenzhen and Hong Kong all compete for a piece of the action.
Sogou, the tech firm that operates China’s second-biggest search engine and most widely used input method for writing Chinese characters, was among those in talks with the country’s securities regulator to list in mainland China.
“Sogou, along with a couple of other Internet companies, is expected to make a breakthrough [to start the process] this year,” Sogou chief executive Wang Xiaochuan was quoted by the South China Morning Post as saying.
“For internet companies, most of our market and users are in China … To get listed at home would form a bigger synergy,” Wang said.
Potential changes would also allow China’s largest tech firms, Tencent and Alibaba, which are currently listed in New York, to trade shares in mainland China. One option being considered, according to The Wall Street Journal, would be to allow companies incorporated overseas to issue depository receipts in China. Both Tencent and Alibaba are incorporated abroad in order to get around Chinese restrictions on foreign investment in the technology sector.
“At some point it makes sense for Alibaba and Tencent to have their primary listings in China,” Paul Gillis, an accounting professor at Peking University’s Guanghua School of Management, was quoted as saying. “The government has a long-term plan to wean these companies off the US.”