New Third Board to divide companies into two markets

The country's securities regulator announced on Friday that China's third national equity market will divide its listed companies into two markets from May, a move aimed at meeting the requirements of small and medium-sized enterprises and to improve efficiency.

The National Equities Exchange and Quotations will separate the companies into innovation market and basic market, according to Zhang Xiaojun, a spokesman of the China Securities Regulatory Commission on Friday.

"The National Equities Exchange and Quotations will continue to study and evaluate the market division systems to perfect the differentiated management on listed companies," said Zhang.

"The move can meet requirements of companies at different development stages and is good for listed companies to have competition and make progress," said Li Daxiao, chief economist at Yingda Securities Co.

The National Equities Exchange and Quotations, or the New Third Board, is popular among micro, small and medium-sized firms. There were 5,878 companies listed on the market as of Friday. Qualified investors on the market should each have investable funds of no less than 5 million yuan ($767,800).

The New Third Board released draft rules on market division in November and sought opinion from the public in November and December.

The draft rules said that companies listed on the innovation market of NEEQ will enjoy pilot policies first, but their information disclosure requirements will be stricter.

The CSRC said in November that it was studying a pilot program for companies listed on the New Third Board to go public at China's Nasdaq-style market－the ChiNext board in Shenzhen, Guangdong province.

Meanwhile, Chinese stocks recovered from Monday's plunge to post their biggest weekly gain this year.

The benchmark Shanghai Composite Index rose on Friday by 0.5 percent to close at 2,874.15 points. Industrial & Commercial Bank of China Ltd, the most valuable company listed on the bourse, jumped the most in four months to lead gains by large-cap shares. A gauge of smaller shares declined.

The Shenzhen Component Index dropped 2.31 percent, while the startup index ChiNext declined by 4.98 percent.

The Hang Seng China Enterprises Index increased 1.99 percent in Hong Kong, while the Hang Seng Index advanced 1.18 percent to rise for a third straight week.

Hong Hao, managing director and chief strategist at BOCOM International Ltd, said the market is still concerned about the registration-based system for initial public offerings.

Such concerns, which are unique to the mainland market, are key to the performance differences between the mainland and Hong Kong stock markets, said Hong.