The framework for China’s NASDAQ-type second-board market for promising high technology firms will be worked out by the end of next month, and the new bourse will begin operations by the end of the year, according to a top official with the Shenzhen Stock Exchange.
“Everything is ready for the launch of the second-board market in Shenzhen, except the personnel," said Wu Yonghe, an executive at the Shenzhen exchange, where the new shares will list.
So far, Shenzhen has channeled at least 500 million yuan (US$60 million) into setting up the market - designed to provide capital for China’s fledging enterprises that can’t meet requirements for a listing on the main boards.
Drawing lessons from Hong Kong’s struggling Growth Enterprise Market, which has experienced problems attracting investors, Wu said at least 50 firms would be listed initially.
“If the number is too few, trading will be sluggish," he said during a recent symposium in Shanghai.
Some 300 firms have applied for authorization to raise funds on the new board, according to Wu.
“Until now, the China Securities Regulatory Commission hasn’t dealt with any applications," he pointed out.
Sketching out the entry rules, Wu said each firm will be required to hold registered assets of at least 10 million yuan and tangible assets of 8 million yuan.
Applicants must show a two-year business tenure and demonstrate the potential for sustained earnings growth.
Given the lower entry threshold, reporting requirements will be tougher for the new market than those governing the main boards.
“The firms will be asked to report their financial status and earnings every quarter," said Wu.
Listed companies now must file only an annual and an interim earnings report.
In addition, promotions, demotions and terminations of senior management must be listed in the reports, added Wu.
To further increase transparency and save publishing costs, Wu said at least 95 percent of the company information would appear on the exchange’s website.
Unlike the country’s current markets, the required investment for trading on the new exchange will prevent the small-time punter from participating.
Investors must open an account with at least 300,000 yuan and conduct lump-sum trading of 50,000 yuan.
(eastday.com)
