China's 'Two Sessions' 2016

Beijing backs away from plans for new trading board geared towards emerging industries

No mention of the new board appears in the text of the amended 13th five-year plan, according to mainland media reports

PUBLISHED : Tuesday, 15 March, 2016, 7:50pm
UPDATED : Tuesday, 15 March, 2016, 7:52pm

In a surprise move that reflects Beijing’s capricious policymaking on the stock market, the central government appears to have shelved a plan to create a high-profile new board for emerging industries, just three months after it received a go-ahead from Premier Li Keqiang.

In an amended version for the 13th five-year plan, the mainland’s blueprint for economic and social development in 2016-2020, the attempt to launch the board was deleted, the Beijing Evening News reported Tuesday.

The creation of the board was mentioned in the draft plan released on March 5 when the annual session of the National People’s Congress unveiled its curtain.

On December 23, 2015, the State Council gave a green light to the Shanghai Stock Exchange to establish the new board after a meeting chaired by the premier, and it was highly expected that it would debut this year.

The new board which will have a lower listing threshold than the main board is part of the leadership’s strategy of bolstering technological innovation and supporting high-growth companies in the industries of IT, new energy and biotechnology.

Two sources close to the China Securities Regulatory Commission (CSRC) said the changes made in the five-year plan were a sign that the leadership would shift focus from reforms to risk-control and stabilisation.

“It is understandable that the main task for the market regulator lies in the efforts to keep the market stable and restore investor confidence,” said Shanghai Shiva Investment fund manager Zhou Ling. “Those companies which are awaiting the launch of the new board to raise funds are the main victims.”

Premier Li is strongly advocating expanding funding sources for technology firms to help the economy transitions from investment-led growth to a new model driven by consumption.

The proposed new board was seen as a way to attract hundreds of New York-listed mainland technology companies to relist in Shanghai.

Dozens of the New York-listed companies including Qihoo 360 Technology have either kicked off the relisting campaign or planned to do so.

The overseas-traded firms that use the so-called variable interest entity ownership structure will have to complete a privatisation process and restructure before returning to the mainland stock market.

On Saturday, Liu Shiyu, the newly-appointed chairman of the China Securities Regulatory Commission, refused to give a time frame for the launch of a new initial public offering (IPO) system that was expected to debut in the first half of 2016.

The so-called registration-based IPO mechanism was designed to ease the fundraising process, which is believed to be a groundbreaking reform on the mainland market.