China to set up new trading zone in Shanghai for high-tech companies

Photo: Bloomberg

China will set up a new trading venue in Shanghai that will make it easier for high-tech companies to access funding, as President Xi Jinping vows more opening measures to boost the world’s second-largest economy.

The Shanghai Stock Exchange will also start a pilot program on a registration-based system of initial public offerings, Xi said at the opening ceremony of the China International Import Expo on Monday, without elaborating on either initiative.

China is expanding efforts to keep its most promising companies from going public in Hong Kong or the U.S. Officials were studying a possible new trading venue in Shanghai that would have lower thresholds for biotechnology and high-tech firms, people with knowledge of the matter said in June. The new market, which might waive earnings and revenue requirements, would operate at the Shanghai Stock Exchange, and could open as early as next year, the people said at the time.

“There was little or no anticipation of something like this, and so the reaction in the community so far is quite muted or calm,” said Tom Wang, portfolio manager at Shenzhen Qianhai Youjoy Capital Management. “There are no details on the supporting policies, but to take it at face value, it may mean allowing loss-making companies to go public.”

The China Securities Regulatory Commission will move ahead with a trial for the high-tech-focused venue at a measured pace, and will encourage smaller investors to participate via mutual funds, according to a statement from the regulator after Xi’s speech. Companies seeking to list will be subject to different profitability and ownership requirements compared with the existing stock exchanges, the CSRC said.

Policy makers are looking at ways to boost China’s stock market, which in recent years has seen businesses worth more than $1 trillion go public on overseas exchanges. Regulators have drawn up rules for Chinese depositary receipts that would allow companies such as Alibaba Group Holding Ltd. to list shares domestically, and efforts are underway to encourage homegrown large tech firms, known as unicorns, to debut on existing venues in Shanghai or Shenzhen.

Biotech firms without a track record of revenue or profits can list in Hong Kong under rules that took effect in April, part of a broader effort by Hong Kong Exchanges & Clearing Ltd. to attract technology-focused firms and compete head-to-head with U.S. markets for initial public offerings.

“In my decades trading in China’s stock market, there’s a new board every three-to-five years,” Hou Anyang, fund manager at Frontsea Asset Management in Shenzhen. “There’s nothing special about this.”

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.