Shanghai’s hotly anticipated tech board vital to China’s global financial ambitions, says top official
- Authorities have approached a ‘handful’ of potential IPO candidates for eagerly anticipated new board in Shanghai and will soon release draft rules for listings
- The board is a key pillar of a new action plan to turn the city into one of the world’s top financial centres by next year
Chinese authorities said they have approached a “handful” of potential IPO candidates for the hotly anticipated new technology board in Shanghai and will soon release draft rules for listings.
The rules, to be sent out for a period of public consultation, will govern the listing threshold, trading mechanism and IPO review procedures for the Technology Innovation Board, top government officials said on Tuesday.
“We are approaching a handful of IPO prospects in several key technology sectors to help the securities regulator make preparations for the launch of the board,” said Zheng Yang, the director of the Shanghai Financial Services Office, at a joint news briefing of the Shanghai city government, the China Securities Regulatory Commission (CSRC) and the People’s Bank of China.
“Our office is responsible for serving the candidates, keeping them informed of the new rules before IPOs.”
He did not reveal the names of the IPO candidates.
The new board is a key pillar of a new action plan, unveiled at the briefing, to build the city into one of the world’s top financial centres by next year.
It is one of the most important moves by China’s leadership to deepen financial reforms and help Shanghai maintain its status as a pioneer of those reforms, said Zheng.
The action plan outlines six “missions” aimed at helping Shanghai to deepen its financial reforms and further open up its markets. The goal is to develop Shanghai into a top-notch global financial market with a focus on yuan-denominated products, equipped with a strong capacity to deploy financial resources.
The Technology Innovation Board, eagerly anticipated ahead of its touted debut at the Shanghai Stock Exchange in the first half of this year, was first unveiled by Chinese President Xi Jinping in early November. It is expected to adopt looser regulations for IPOs to help Shanghai compete with other top international listing destinations, such as Hong Kong.
According to the officials, the board will embark on a registration-based IPO system under which the regulators will relinquish their responsibilities in assessing the applicants’ earnings potential, instead letting the market decide their worth.
“The launch of the Technology Innovation Board has already become the No 1 project for the CSRC,” said Yan Bojin, head of the CSRC’s Shanghai bureau, at the same briefing.
The regulator is working with Shanghai authorities to conduct a comprehensive study of new economy firms in the city, he added.
Li Xunlei, chief economist at Hongtai Securities, said only a limited number of technology companies will be granted approval to raise funds on the board initially.
“The regulator still needs to test whether the new IPO and trading systems will work well in the early stages, before expanding the board,” he said.
“Only a few firms will get the go-ahead to list on the board when trading debuts.”