Shenzhen emerges as favoured location after specialising in innovative firms China's securities regulator has revived a plan to establish a technology-focused stock board in Shenzhen and turned its attention to developing and regulating the country's over-the-counter equity exchanges, sources said. The Shenzhen stock exchange's aspiration of establishing a fund-raising platform for technology companies was given a boost by China Securities Regulatory Commission (CSRC) chairman Shang Fulin, who said the regulator will encourage the establishment of the board next year. 'Since 2000, the Shenzhen stock exchange has been working to prepare the innovative industry board. We will issue rules to promote the construction of this board,' Mr Shang said. Tianjin is lobbying to establish the exchange in its Binhai New Area development zone. The cities of Wuhan and Xian have also expressed interest in the plan. But analysts say Shenzhen is the favourite by a long stretch. 'When it happens, it will have to happen in Shenzhen, not in Tianjin or anywhere else,' Guotai Junan Securities analyst Yu Yang said. 'The Shenzhen exchange has had this plan for a long time and the city specialises in private, small and medium companies with a relatively higher level of innovation.' The CSRC has not decided on a concrete timetable for the establishment of the board. 'I don't think it will happen immediately,' Mr Yu said. 'China doesn't have a critical mass of innovative companies and without innovative companies, how can you establish an innovative company exchange?' After nearly two years of manic reforms aimed at privatising the more than five trillion yuan of state holdings in listed companies and cleaning up the bankrupt and scandal-ridden brokerage sector, the CSRC has all but declared victory and is shifting its attention to less pressing problems, regulatory sources said. These include promoting the small and medium enterprise board in Shenzhen, establishing the technology board and developing the country's over-the-counter equity exchanges. The mainland has more than 200 loosely regulated equity exchanges scattered across the country, which function as venues for widespread privatisation of state assets. The CSRC intends to transform these exchanges into proper over-the-counter markets where company shares can change hands in a regulated and transparent environment. 'Pushing the [over-the-counter] markets to be more active will allow companies to raise capital even if they aren't eligible to list and will encourage more merger and acquisition activity in China,' China Galaxy Securities chief economist Zuo Xiaolei said. 'This will have a positive impact on China's capital markets as a whole.' Shenzhen and Shanghai listing rules require companies to have existed as shareholding entities and have been profitable for at least three years, a standard that is often hard for hi-tech start-ups to meet.