China stock market

Beijing sends a signal with appointment of Huang Hongyuan as chairman of Shanghai Stock Exchange 

Huang’s appointment signals Beijing’s commitment to attracting technology companies and broadening links with international markets

PUBLISHED : Monday, 07 May, 2018, 6:28am
UPDATED : Monday, 07 May, 2018, 7:34am

Veteran securities regulator Huang Hongyuan has been appointed chairman of the Shanghai Stock Exchange, signalling Beijing’s commitment to attracting technology companies and broadening links with international markets. 

Huang, 54, will fill the vacancy left by Wu Qing who became a vice-mayor of Shanghai in January.

The securities regulator said in a statement on Sunday that Huang will carry the rank of vice-minister following the appointment.

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Huang’s appointment was announced on Friday during a meeting in which CSRC chairman Liu Shiyu urged exchange officials to make a priority of attracting high-quality companies to list in Shanghai and Shenzhen.

The Shanghai exchange is actively seeking to attract technology companies with valuations of more than US$1 billion – as the central government encourages capital raising activities to help foster growth in the new economy. 

On Friday, the CSRC published a draft operating guide for the Chinese Depository Receipt (CDR) mechanism, a move intended to facilitate technology “unicorn” initial public offerings.

Under the CDR system, part of a company’s shares are transferred to a custodian bank, which sells them on an exchange abroad.

“The role of the stock exchange’s top boss is important now because of the task of luring technology firms,” said Zhou Ling, a fund manager with Shanghai Shiva Investment. “An official with experience in running the exchange is a proper choice.”

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Previously, Beijing would appoint a senior CSRC official to head the Shanghai exchange, rather than promoting an official from within the managerial ranks of the exchange as chairman.

Huang became executive vice-president of the Shanghai exchange in 2011 before he was nominated president the following year.

Between 1992 and 2011, he served at the CSRC, assuming a number of roles, including director of the risk management office and deputy director of the fund supervision department.

The CSRC did not say who will take up the position vacated by Huang.

Luring unicorns is part of an effort to support transition of the Chinese economy into a sustainable growth model driven by entrepreneurship and consumer spending.

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Previously, major Chinese technology companies conducted IPOs on overseas markets such as Hong Kong and New York because their ownership structure  was not in compliance with mainland requirements.

The Shanghai bourse is also working with its London counterpart to establish a stock connect that will allow investors to trade shares on each other’s markets.