China opens new bourse to fund innovative start-ups
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The Beijing Stock Exchange opens today in an effort to broaden investment channels for smaller companies that aren’t large or profitable enough to list on other Chinese markets.
- Ten new companies will debut, including data analytics firm Shenzhen Suntang High-tech and quartz crystal component maker AnHui Jing Sai Technology.
- The exchange will be an alternative to the Shanghai and Shenzhen exchanges focused on medicine, mechanical equipment, new materials, and information technology.
The context: The new exchange is the successor to an earlier bourse founded in 2012 called the National Equities Exchange and Quotations (NEEQ), which failed to provide adequate capital to small businesses. Companies currently trading on the NEEQ will list on the new exchange, the security commission said.
- China’s interest in equity financing may also be a way to reduce its banks’ exposure to credit risks.
- Beijing is hoping to breed “specialized, new” companies to break supply chain bottlenecks, according to top leaders, and to reduce technological reliance on the West.
Key question: Compared to U.S. exchanges, China’s are biased toward larger firms and sclerotic in their decision-making and approval process. Can the new board change this reputation? Analysts are skeptical.
