Start-ups to get listing boost

Promised reforms to new-growth exchanges will begin with ChiNext registration shake-up, removing regulator’s approval rule

by Nadeem Xu
Start-ups to get listing boost
The Shenzhen Stock Exchange operates ChiNext and will be given greater powers to allow more listings.  

(ATF) China will make it easier for start-ups to list on the nation’s Nasdaq-style ChiNext stock exchange as it pushes through plans to bring in private capital to help speed the nation’s post-coronavirus reconstruction.

It plans to optimize the issuance and underwriting of initial public offerings (IPOs) as part of new ChinNext reforms, the country's top securities regulator said Sunday. At its heart would be a shift in approvals from the China Securities Regulatory Commission (CSRC) to the Shenzhen Stock Exchange, which operates ChiNext.

It will also drop the exchange’s bar to non-profitable companies in a bid to expand listings beyond the almost-900 already trading on the exchange.

The changes come after China signalled last month it would shake-up ChiNext, and its Shanghai Stock Market-based equivalent, the Star Market, last month. 

The strategic placement threshold will be relaxed to enhance inclusiveness and flexibility, according to the regulation and backup systems will be required to control risks and protect retail investors.

The regulation will retain the IPO pricing mechanism, allowing sales of less fewer than 20 million shares and with no share publicly offered by shareholders to set prices directly.

China has pledge reforms to its financial markets to open them up to foreign investors. While the programme has been in the making for some time, it has been given added impetus by the coronavirus crisis, which led to the first quarterly contraction since China opened itself up to free-market operations in the early 1980s.