Shanghai gears up new market for start-ups

May 20, 2015 08:33
Shanghai's small board will challenge Shenzhen's widely successful NASDAQ-style market for start-ups. Photo: WSJ

Shanghai is gearing up for the launch of a market for small, innovative companies this year.

That will allow the Shanghai Stock Exchange to compete with the wildly successful NASDAQ-style start-up board in Shenzhen, the Wall Street Journal reported Wednesday, citing people familiar with the matter.

The Strategic Emerging Industries Board will host companies in sectors favored by Beijing for building an innovation-driven economy including computer science, information technology, renewable energy and bioscience.

The plan has been approved by securities regulators and could be in place by the end of this year, setting up a direct challenge to Shanghai’s smaller rival, the Shenzhen Stock Exchange and its ChiNext market, which is up 126 percent this year.

“The new board in Shanghai will certainly pose a threat to ChiNext,” a source was quoted as saying.

The exchange is expected to launch after China formally switches its approval system for initial public offerings to allow corporate leaders and market conditions, rather than regulators, to determine the size and timing of initial public offerings.

The National People’s Congress is widely expected to approve the changes to the Securities Act in October.

The new regulations would be in line with President Xi Jinping’s pledge to let market forces play a more decisive role in the world’s second-largest economy.

The new stock market fits with China’s long-standing effort to channel money to promising technologies.

On Tuesday, China unveiled an ambitious plan, titled “Made in China 2025”, to enhance the competitiveness of its manufacturing sector by encouraging innovation and raising efficiency in an effort to boost economic growth.

The Shanghai exchange, which mainly hosts large state-run firms, has been planning the new board for several years to win back investors who fled the market during its multiyear slump, which ended last year, the people said.

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