The China Securities Regulatory Commission is set to launch a new board that will serve domestic high-growth and innovative enterprises next year. (Photo : www.china.org.cn)
A senior official with the country's securities watchdog has announced on Friday, Dec. 25, the launching of a "strategic emerging industry board" next year which will serve domestic high-growth and innovative enterprises, the Xinhua News Agency reported.
"The existing ChiNext startup board is not enough to meet the financing needs of emerging companies as the Chinese economy continues to grow," Fang Xinghai, vice director of the China Securities Regulatory Commission (CSRC), said.
The report said that the ChiNext, a NASDAQ-style board of the Shenzhen Stock Exchange, was tasked to track growth enterprises. The country is currently experiencing a surge in such enterprises as the government pushes for entrepreneurship and innovation.
Fang said that the creation of the board will provide enterprises with diverse financing channels and lower financing costs as well as help prevent financing risks.
"When these companies access financing in the market, they rely less on bank loans. This prevents a concentration of financial risk in the banking system," Fang added.
On Wednesday, Dec. 23, the State Council declared its support for the development of direct financing that will help reduce production costs for enterprises.
The report said that the general mechanism and specific rules of the new board are being discussed by the CSRC and the Shanghai Stock Exchange to make sure it can accommodate the ChiNext Index.
Huo Da, director of CSRC's market department, said that the competition between the two will be "moderate." He said that the establishment of the new board will see progress next year as the country works to transform its IPO approval system into a registration-based system.
Under current rules, companies have to wait a long time for the CSRC's approval before listing, the report said.
According to Fang, China is likely to launch a stock connect scheme between the Shenzhen and Hong Kong bourses next year. The stock connect schemes would allow investors to trade on both bourses under a quota, which are seen as moves toward a more open capital market on the Chinese mainland.
