Shenzhen bourse to lower barriers for listing on ChiNext

As market participants await more detailed rules for the Shanghai technology innovation board to come out, rules to relax the listing requirements of the ChiNext board in Shenzhen are in the pipeline.

A rough guideline of listing rules for the long anticipated innovation board is expected to be completed by the end of December, while the market may have to wait for another few months to see enterprises list on the new board, according to sources close to the regulators.

The technology innovation board expected to be unveiled at the Shanghai Stock Exchange is part of China's broad effort to build a multi-layered capital system and encourage high-tech development, which is expected to ease financing pressure for companies that take the lead in the high-tech sector from robotics to electric cars.

The latest move has appealed to many high-tech companies, with dozens of them lining up to prepare for listing on the new board.

Coupled with efforts to build the new board, regulators have been speeding up the pace to promote reforms of the ChiNext board in Shenzhen, with more steps lowering barriers for listing expected to be rolled out in the future.

Peng Ming, deputy general manager of the Shenzhen Stock Exchange, said at a forum in Shenzhen on Monday that he expects to relax requirements for companies intending to go public on its Nasdaq-style ChiNext board and to refund.

Peng stressed that bourses in Shanghai, Shenzhen and Hong Kong share the common aim of meeting the funding demand of real economies, especially emerging economies.

Currently, a firm seeking listing on the ChiNext board is required to be profitable for the past two consecutive years and accumulated profit of no less than 10 million yuan ($1.45 million).

It is already a relatively low criteria compared with that for Shenzhen's main board and the SME board, which requires positive net profit for three consecutive years and the aggregate value should be no less than 30 million yuan.

He believes domestic capital markets still have "much more room" for enlarging inclusiveness for the development of new economies.

In addition, he also noted the exchange will expand support for more private companies to go public by utilizing more market-oriented methods, such as mergers and acquisitions, to cultivate large and strong economies.

Earlier this year, Hong Kong's IPO market also allowed biotech firms to go public before making any revenue.

While some experts have concerned that the ChiNext for startups might lose competitiveness after the new board goes into operation, analysts said with different listing bars, they serve different kinds of companies intending to get financing.

Jiang Yichen, an investment manager with China Development Bank Capital, said the new board in Shanghai caters to nonpublic companies with core high tech but they have yet to reach the scale to list on the main bourse, while the ChiNext is expected to play a bigger role in widening financing channels for a greater number of small and medium-sized companies in need of financing.

He said he expected there might be more policies to combine ChiNext and SME board as their roles have been somehow overlapped.