China Names First Three Firms Eligible To Join New Technology Board

China has named the first companies eligible to join its new trading venue for technology stocks.

Shenzhen Chipscreen Biosciences Co., Suzhou TZTEK Technology Co. and Anji Microelectronics Technology (Shanghai) Co. have been approved, the Shanghai Stock Exchange said in a statement on its website.

“The early tech board companies are likely to see valuations at very high levels due to Chinese investors’ enthusiasm for new shares,” said Zhang Yankun, a partner and fund manager at Beijing Hone Investment Management Co. “Our fund plans to participate in tech board IPOs and will gradually invest in the secondary market, with a focus on unicorns and industry leaders.”

The companies are among 117 that have applied to list on the Science and Technology Innovation Board. The venue is an attempt by the government to expand funding sources for smaller and innovative firms, and it comes as a trade clash with the U.S. expands to technology and other areas.

The new Nasdaq-style board is also a testing ground for reforms to the country’s $6.4 trillion stock market — the world’s second largest. Regulators have waived restrictions on how firms are priced when they list and eased reviews for applicants. And they’ve introduced curbs on retail investors who dominate the broader market and have a reputation for speculative trading.

The securities regulator approved all 11 applications for domestic IPOs last month, the first 100% record since at least January 2018, according to data compiled by Bloomberg. The pattern is likely to continue as authorities want to promote direct financing through the equity market to ease corporate debt and risk, said Yang Hai, an analyst at Kaiyuan Securities Co.

The companies must now file a listing registration with the China Securities Regulatory Commission. The regulator will decide whether to accept it within 20 working days, according to rules published on the stock exchange’s website.

Bloomberg