China to promote direct financing for SMEs

BEIJING - China expects to alleviate the financing difficulties of small and medium-sized enterprises (SMEs) by facilitating their direct financing in the capital market, the Securities Daily reported.

On Sunday, China issued a guideline to boost the healthy development of SMEs with measures including fast-tracking initial public offering (IPO) for eligible firms and encouraging listing on the "new third board."

Since the beginning of this year, a positive development has been seen in the number of completed IPOs and approval rate of applications. As of Monday, 34 enterprises have completed their IPOs, and 11 out of 12 applications for securities regulator review got the green light.

Faster IPO for SMEs on the new science and technology innovation board and the main board will be a strong incentive to the country's innovation-driven development and industrial upgrades, said Peng Hai, an analyst with Lianxun Securities.

As of April 4, the Shanghai Stock Exchange has accepted 50 companies' applications to be listed on the new science and technology innovation board.

Piloting a registration-based IPO system, the new sci-tech board focuses on companies in high-tech and strategically emerging sectors such as new generation information technology, advanced equipment, new materials and energy, environmental protection and biomedicine.

Zhao Qiaomin, an analyst with securities investment advisory firm Guangzheng Hang Seng, expects the country's current boards to be more accessible as entry rules of the new tech board become part of the issuance review process in the A-share market.

In filing for IPOs, firms should carefully evaluate their corporate strength and financing demands and improve management based on the principles of transparent review, Zhao said.