China is planning to make it easier for small, domestic tech companies to raise equity and to seek IPO approvals via a deregulated system.
The Shanghai Stock Exchange will set up a new trading board for science and technology companies and test out the new registration-based IPO system, said Chinese President Xi Jinping during his keynote speech at the China International Import Expo on Monday, The Paper reported.
Fu Lichun, research director of Northeast Securities, thinks it is necessary to set up such a board, as science and technology companies tend to choose overseas capital markets such as Nasdaq or the Hong Kong Stock Exchange to go public. Currently, there is no such area in the existing system of the Chinese capital market.
Meanwhile, it will also offer Chinese companies listed overseas a choice to return to the domestic market.
Yu Miao, an assistant fund manager at Aegon-Industrial Fund, thinks this will help to ease financing for small tech firms, especially those that are in rapid development but whose profit indicators are still unable to meet SME listing conditions.