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Economy · Policy · Markets · Equity
China’s Nasdaq-like STAR Market to launch 25 IPOs on Monday
2019/07/19 09:29:32
Shanghai Stock Exchange, new stock exchange, STAR Market, China reforms

Jul 19, 2019 (China Knowledge) - The Chinese market is buzzing with enthusiasm as China's new Nasdaq-like stock venue will begin trading on Monday. The new share board came just eight months after Chinese President Xi Jinping announced plans for freer trading of technology stocks.

The Shanghai Stock Exchange's STAR Market will be launched with 25 new companies, out of the hundreds of applicants. The new board is seen as China's notion to draw in and channel funds to domestic homegrown companies with cutting-edge technologies in areas like artificial intelligence, big data, cloud computing, and advanced materials.

The first-batch of listing companies include gastrointestinal equipment maker Micro-Tech (Nanjing) Co. Ltd. Advanced Micro-Fabrication Equipment Inc., which sells products used to make semiconductors and already Hong-Kong listed China Railway Signal & Communication Corporation Ltd.

These 25 STAR listings are set to raise RMB 37 bln at an average valuation of 53 times of annual earning, much higher than the price-to-earnings ratio cap of 23, maintained by the CSRC.

The STAR Market's rules are vastly different from current practice in China by offering the promise of quick and easy listings. Instead of the traditional yearslong process of applying for IPO approval from the China Securities and Regulatory Commission (CSRC), the new share board in Shanghai offers a simpler registration-based system like major exchanges.

Regulators have also lifted caps on pricing for the first five trading days, followed by a 20% cap in either direction. In a move to limit volatility, stocks which raise by 30% and then 60% from the opening price in the first five trading days, a 10-minute trading suspension will kick in.

Market players have welcomed and looked forward to the STAR Market, citing the above reforms will increase confidence in China's heavily regulated capital markets.

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