SHANGHAI (Reuters) – A rising variety of firms buying and selling on China’s major over-the-counter (OTC) fairness market are defecting to Shanghai’s hotly-anticipated Nasdaq-style know-how board, as they observe the cash.
FILE PHOTO: An investor seems at an digital board displaying inventory data at a brokerage home in Shanghai, China September 7, 2018. REUTERS/Aly Music/File Picture/File Picture
4 firms, together with Jiangsu Beiren Robotic System Co and Jiangxi JDL Environmental Safety Co, have already determined to ditch Beijing’s New Third Board, and apply for an inventory on Shanghai’s Science & Know-how Innovation board, anticipated to be launched in months.
Late on Tuesday, Certusnet Data and Know-how Co turned the most recent defector, saying its shareholders will vote later this month to leap ship. Extra firms are anticipated to observe swimsuit.
The wave of desertions underscores the possibly disruptive nature of Shanghai’s upcoming new tech board, which some see because the boldest reform undertaken to date in China’s capital markets.
However as asset managers rush to launch tech board funds, and retail buyers scramble to open buying and selling accounts, there are issues the brand new capital markets darling would replicate the boom-and-bust cycle skilled by the OTC board.
The New Third Board was launched in early 2013 to assist fund innovation start-ups, however after an preliminary fever, the market has turned lifeless.
“Buying and selling quantity is tiny on the New Third Board, and the market gives little assist when it comes to financing,” stated Wang Qing, vp of Beiren Robotic, which this month determined to arrange for an inventory on Shanghai’s new tech board.
Beiren Bobot, which counts Zurich-based industrial large ABB and Germany’s robotics agency Kuka as rivals, wants recent capital to develop, and the brand new board is an efficient vacation spot, Wang stated.
Peng Hai, analyst at Lianxun Securities, estimates that 428 out of a complete of 10,407 firms at present traded on the New Third Board are certified for the brand new tech board. Though the OTC board has a low itemizing threshold, it isn’t open to public buyers, leading to a dearth of liquidity.
Shanghai’s tech board, introduced by President Xi Jinping in November, marks a radical shift from the presently prolonged and cumbersome IPO course of. Now, the board’s registration-based itemizing process cuts the regulatory purple tape and permits start-ups which have but to show a revenue to record.
“We predict this might show to be the boldest reform undertaken to date in China’s capital markets,” HSBC strategist Steven Solar wrote in a report this month. “We additionally assume it is likely one of the most important strikes in China’s provide facet reform of the monetary trade.”
Shanghai’s new board additionally exerts strain on Shenzhen’s start-up board ChiNext, which is seeking to embrace the registration-based IPO system too amid fiercer competitors for itemizing sources.
For instance, DaoCloud, a cloud computing start-up, stated it can now purpose to record in Shanghai, tearing up its earlier plan for a Shenzhen itemizing.
However Ronald Shuang, managing director of China-focused personal fairness agency BeiKai Capital, stated the feverish temper round Shanghai’s new tech board stirs reminiscences of the once-hot OTC board. “At first there was a number of pleasure across the New Third Board too…now, no firm desires to record there.”
Shuang stated certainly one of his portfolio firms is leaving the New Third Board as nicely, however is aiming to drift in Hong Kong, not Shanghai.
Modifying by Jacqueline Wong