‘Not impressive’: China’s ambitious stock market reform meets with lukewarm reaction
- Groundbreaking reforms around new ‘technology and innovation board’ aim to make China’s stock market globally competitive
- Companies, bankers and investors raise concerns over restrictions and Beijing’s track record
A major overhaul of China’s stock market designed to help it compete with the likes of New York and Hong Kong by attracting the world’s leading technology firms has received a lukewarm response from companies, banks, and investors.
On Wednesday night, the country’s top securities watchdog, the China Securities Regulatory Commission, introduced a hotly anticipated new board for technology start-ups. The Shanghai Stock Exchange then issued a set of rules tailor-made for the so-called “technology and innovation board” for a period of public consultation.
Many of them represent a big change from existing stock market regulations. They include allowing companies that are not yet profitable to list for the first time and partially scrapping the limit on daily share-price movements.
Crucially, foreign-funded Chinese companies that make use of an ownership structure known as VIE (variable interest entities) will be allowed to list for the first time too.
The biggest change is that listing applications for the new board will be “registration-based”, a much quicker system China has been studying in developed markets for a decade.
Currently, all the listing applications in China go through a notoriously time-consuming review by the regulators. It can last years as officials delve into the companies’ financial condition, their ability to make profit, and the pricing of the shares.