New board to host stars of science, tech

Huang Yixuan
China steps up the campaign to reform its capital markets with the launch of the STAR Market and Shanghai-London Stock Connect, which ushers innovation in science and technology.
Huang Yixuan

The launch of the STAR Market on the Shanghai Stock Exchange in mid-June is seen as a major step in China's campaign to reform its capital markets and usher in the development of innovation in science and technology.

The Nasdaq-style board is aimed at giving companies involved in cutting-edge science and technology greater access to funding.

Chinese Vice Premier Liu He told the recent Lujiazui Forum that central government authorities attach great importance to the establishment of the STAR Market and endorse the new registration system for initial public offerings, turning them largely over to market forces.

The new STAR Market was first proposed last November and approved in January. It will focus on companies in technology and strategic emerging sectors, such as next-generation information technology, advanced equipment, new materials, new energy, energy savings and environmental protection, and biomedicine, according to the China Securities Regulatory Commission.

As of June 10, the Shanghai Stock Exchange had accepted listing applications from 119 companies. And after a review by the Shanghai Stocks Exchange on June 17, two more approvals brought the total to 11 companies.

Coming in tandem with the new board, the new Shanghai-London Stock Connect system has begun, allowing companies in both countries to list and trade on one another’s stock exchanges. The system is one major outcome of the financial cooperation forged by China and the UK and gives impetus to Shanghai’s goal of becoming an international financial center.

The Shanghai-London link was first proposed during a visit by Chinese President Xi Jinping to Britain in 2015. The start of the system was delayed from a scheduled December opening.

The connect marks the first time that overseas-listed companies will be allowed to sell shares on the mainland and represents an important step in China’s efforts to open its capital markets wider to foreign players. 

China has a similar connect program with the stock exchange in Hong Kong.

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