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China launches its 'Nasdaq' technology board in Shanghai on Monday to compete with tech rival US

Monday, July 22nd 2019 - 09:20 UTC
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Twenty-five stocks will debut on the Shanghai Exchange's Sci-Tech Innovation Board, in which trading rules have been eased to help channel funding to start-ups Twenty-five stocks will debut on the Shanghai Exchange's Sci-Tech Innovation Board, in which trading rules have been eased to help channel funding to start-ups

Trading begins on Monday (July 22) on a new Nasdaq-style technology board in Shanghai that represents one of China's most significant market reforms, and a potential weapon in its growing tech rivalry with the United States.

Twenty-five stocks will debut on the Shanghai Stocks Exchange's Sci-Tech Innovation Board - dubbed the STAR Market - in which listing and trading rules have been eased to help channel funding to start-ups.

China's government envisions the board being mentioned in the same breath someday as the tech-heavy US Nasdaq, encouraging firms to list at home after the likes of Alibaba and Baidu chose Wall Street.

But the initial impact is expected to be slight.

“I think the science and technology board will develop into a major and important sector in China's capital markets, but it will take a long time, maybe 10 years, 20 years, or even longer,” said Jiang Liangqing, a money manager at Ruisen Capital Management.

China hopes to draw listings from among the country's rich stable of tech “unicorns” - start-ups valued at a minimum US$1 billion - such as Alibaba-linked mobile-payments pioneer Ant

Financial, ride-sharing giant Didi Chuxing, and online-services platform Meituan-Dianping.

None of those are among the initial listees, however, which include no household names.

The biggest is China Railway Signal & Communication Corporation, which has reportedly raised 10.5 billion yuan (US$1.53 billion), the most of any board constituent.

It's a leap of faith for China's volatility-averse authorities, as stocks have relatively free rein. For the first time, Chinese companies can list without a track record of past profits or restrictions on IPO pricing.

There will be no limits on price movements for the first five days of trading, after which a daily 20 per cent band is imposed.

China's main exchanges are subject to a 10 per cent band to contain volatility on the often rumor-driven markets.

The tech board was announced in November by President Xi Jinping as a battle with the United States for technological supremacy heated up.

Xi has called on China's tech leaders to become global champions, while the US has fought back in part by taking steps to clip the wings of Chinese telecom giant Huawei.

Categories: Economy, Politics, International.

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