• Shenzhen Stock Exchange

Shenzhen Stock Exchange (Photo : Getty Images)

China's Shenzhen stock exchange is set to create a new platform which will give Indian tech startups and fintech companies access to Chinese capital, according to an article bylivemint.com.

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Dubbed as Cross-border Capital Services Platform, the Tech 2.0 platform is already being used for Chinese companies, but now it will be extended for Indian tech companies, the report said.

Shenzhen Securities Information Co. Ltd., a wholly owned subsidiary of the Shenzhen Stock Exchange, is the largest exchange in the country by trading volume.

Wu Lijun, chairman of the Shenzhen bourse, and other exchange officials attended a roadshow in India last week to present Indian companies to Chinese investors.

Huiqi Pei, head of the exchange's international department, said that India is the first market for the cross-border funding.

"China and India are often depicted as the 'world factory' and 'world office,' both of which are indispensable segments in global value chains," Pei said. "Economic cooperation between the two most populous countries will form the most competitive production base and most attractive consumption markets. Yet the mutual investment between the two sides is by now not as active as it should have been."

China is now in the 18th place in terms of foreign direct investment in India, with only seven Chinese investors registered as foreign portfolio investors.

"There is much room for improvement and we think it is quite promising to start with India and tap the great potential between these two economies. With the good consumption potential and bright market prospects drawn from its vast population, India will attract more and more investment from Chinese investors and companies," Pei added.

At least 40 Chinese investors attended the event to look for potential companies for investment in the country.

Functions of the platform

According to the report, the platform will provide easier access to information sharing and connect Indian tech companies with Chinese private equity and venture capital investors.

"Lots of Shenzhen-listed companies as well as VC and PE are focusing on cross-border investment and Merger and Acquisitions as China's economy is increasingly merged with global value chain. It is logical for the exchange to provide a trusted and public-welfare-based platform to eliminate information asymmetry and facilitate cross-border capital formation," Pei said.

The exchange expects more investments to flow from China to India and vice versa.

Pei said the platform will also set the standards for operating mechanism, maximize technical capabilities, enhance risk protection and create a credible cross-border capital services platform.

He added that the platform will help investors from both China and India to share the high-tech and innovative services of the platform.

Although there are platforms in India that allow investors and companies to meet, they are not governed by the exchange, the report said.

In 2014, the Securities and Exchange Board of India (SEBI) had proposed an exchange platform that will enable investors and tech companies to meet. It did not materialize due to the lack of participants and strict regulatory requirements.

The Shenzhen exchange is looking at the possibility of working with an Indian exchange to further enhance the development of the platform.