Briefing: China to set up new trading venue for tech companies

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China to Create Stock Venue in Shanghai for High-Tech Companies – Bloomberg

What happened: President Xi Jinping announced at the China International Import Expo (CIIE) that China will set up a new trading venue in Shanghai to encourage high-tech companies to access funding. Xi said that Shanghai Stock Exchange will start a pilot project for a registration-based IPO system. The president has released no further information regarding the issue.

Why it’s important: Xi’s speech is widely seen as a sign to implement more state-backed policies to keep tech companies flushing to overseas markets for IPOs in China. The registration-based system will encourage those in a loss financial condition to go public, but will also significantly reduce the possibility of leveraging mergers and acquisitions for IPOs. Meanwhile, it is unclear what impact the new high-tech board will lay on China’s Growth Enterprises Market (GEM), the venue for emerging companies.