There is the great hope for startup companies in China to get the funding they need to thrive amongst the big players after President Xi Jinping himself announced plans of creating a technology innovation board that operates similarly to Nasdaq in the United States. This particular board will reportedly be geared towards emerging business and small firms and will have a lower listing threshold.
Previously, if companies wanted to list on the Shanghai Stock Exchange or the Hong Kong Stock Exchange, they need to fulfill minimum requirements, which include plenty of paperwork and large existing operating capital. The plans were revealed in November and government officials are now busy drafting rules and guidelines to meet the expected launch of June 2019.
According to Deal Street Asia, the new technology board will be under the management of the Shanghai Stock Exchange and gets rid of the official control of the IPO process through a simplified registration system. It will also reportedly approve the listing of firms that do not have a significant amount in the coffers yet but have yet to make a profit. This is good news for those in the venture capital market, particularly those involved in tech-heavy businesses, as this effectively reduces the waiting time from years to just months (possibly weeks).
The Shanghai Stock Exchange said in a statement back in November that this move is a key reform measure that will enhance the market's inclusiveness and give innovative enterprises a chance to level with the major players. The board will make the necessary adjustments to the requirements and guidelines so that innovative start-up companies can also be included. The next step then would be to finalize the support systems and rules under the guidance of the China Securities Regulatory Commission.
A report by Caixin Global quoted several analysts as saying that setting up this board is no easy task and could take some time to carry out given that it will need both institutional and legal support. They also reportedly said that the government's announcement was more geared toward boosting business confidence as setting up a fully functioning technology board is not likely to happen in such a short period.
