China market reforms have benefited SMEs and tech companies: JPMorgan


The inner view of Shenzhen Stock Exchange as the first batch of registration-based initial public offerings (IPOs) of 18 enterprises are about to debut on the ChiNext board on August 23, 2020 in Shenzhen, Guandong Province of China.

VCG | VCG via Getty Images)

SINGAPORE — As China continues to push toward further reforms in its financial markets, one of the changes the country made was to revamp listing rules for the ChiNext start-up board.

The move has benefited small and medium-sized businesses, as well as technology firms, according to Chaoping Zhu, a global market strategist at JPMorgan Asset Management.

“Based on the current development in the market, we find that it has been easier for companies to get listed in the stock market since the registration system was adopted,” Zhu told CNBC in an email.

“The major beneficiaries are SMEs (small and medium-sized enterprises) and innovative tech companies,” he said.

The pilot registration-based IPO system was adopted in June. Two months later, the first tranche of 18 companies successfully debuted on the ChiNext board — a Nasdaq-style tech-heavy board in Shenzhen.

The new system requires stricter disclosures and aims to improve market transparency as well as make equity financing easier for tech companies.

The reforms also cut down the IPO processing time by adopting a registration-based system as opposed to the previous system based on regulatory approval. The new rules are similar to those already adopted at the Shanghai Stock Exchange’s Star Market, which started trading in July 2019.

Companies now have “improved” visibility in their bid to go public as a result of the registration system, Ringo Choi, Asia-Pacific IPO leader at EY, told CNBC.

He said the timetable is now “more foreseeable” for firms, compared to the past where the timing was “very uncertain” and the queue