While China has some of the world’s biggest technology companies, many are listed in the U.S. and Hong Kong. First, there was a push to lure companies back with so-called Chinese depositary receipts, which would allow domestic investors to hold overseas-listed Chinese shares. Now, President Xi Jinping is touting the launch of a new trading venue in Shanghai that will make it easier for high-tech companies to access funding. The new bourse will relax rules on listing and trading, moves that Chinese leaders hope can one day be extended to other exchanges.
The Science and Technology Innovation Board is intended not just for tech firms to raise funding but also to streamline the process. The securities regulator currently uses an approval-based system for initial public offerings, which usually takes months to years to complete. The technology board is registration-based, meaning the vetting process would be simplified and companies would face less red tape, speeding things along. The new board removes limits on the pricing of initial public offerings and eliminates caps on first-day trading gains.