Briefing: Shanghai Stock Exchange’s new tech board will have looser trading limits

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Shanghai Stock Exchange says to widen daily trading limits for new tech board–Reuters

What happened: The Shanghai Stock Exchange announced Wednesday that its new tech startup board will have looser trading limits than existing exchanges in Shanghai and Shenzhen. Stocks will be allowed to fall or rise 20% in a day before trading is halted, compared to 10% in other boards. In addition, no daily limits exist for the first five days of newly listed companies. According to an earlier announcement by China’s securities regulator, the board will also allow enterprises that have yet to make a profit, as well as companies with weighted voting rights, to list.

Why it’s important: By loosening trading restrictions for the new board, the Shanghai Stock Exchange likely hopes to head off the disappointing performance of previous attempts at tech-centered boards in Shenzhen and Beijing. According to the China Securities Regulatory Commission, the new board will focus on emerging sectors like new energy, biotechnology, high-tech equipment manufacturing, big data, and cloud computing. Once launched, it’s intended to stimulate the country’s technological development and “innovative capabilities,” trade war or no.