Shenzhen unveils tech industry M&A plan to boost listed companies’ values 40% by 2027

Shenzhen has outlined a plan to boost the combined market capitalisation of locally listed companies by 40 per cent to 20 trillion yuan (US$2.8 trillion) through 2027 by encouraging mergers and acquisitions within the technology industry.

The city, home to some of China’s biggest tech companies like Tencent Holdings and Huawei Technologies, also aimed to have 20 listed companies valued above 100 billion yuan by then, according to a document issued by Shenzhen’s municipal government on Wednesday after the market closed. Industry leaders and key listed companies would be encouraged to pursue expansion and innovation through acquisitions along the upstream and downstream chains, including pre-profit companies, it said.

This marked the latest move by Shenzhen to strengthen its position as mainland China’s tech hub by leveraging the capital market. It also reflects a push by local governments to advance the nation’s tech self-sufficiency strategy amid hi-tech curbs by the US, which is purportedly mulling a new round of tech restrictions before a potential meeting between Chinese President Xi Jinping and his US counterpart Donald Trump by the end of the month.

The plan sparked expectations of more restructuring among locally listed companies, sending some stocks soaring. Shenzhen Institute of Building Research jumped 20 per cent to 20.74 yuan, Shenzhen Water Planning and Design Institute soared 14 per cent to 31.36 yuan and Sidea Semiconductor Equipment rallied 13 per cent to 214.12 yuan. That outpaced a modest rebound on the broader market after the recent weakness, with the CSI 300 Index rising 0.3 per cent on Thursday.

“The capital market needs to play a critical role in serving tech innovation, supporting expansion of emerging industries and nurturing future industries,” said Wei Wei, an analyst at Ping An Securities.