Shanghai’s New Tech Board Draws Attention

Companies that are trading on the main China OTC equity market are turning to the long-awaited tech board that is set to operate just like the NASDAQ. Shanghai’s Science & Technology Innovation board is set to launch in the next few months.

It has attracted four major companies that include Jiangxi JDL Environmental Protection Co., and Jiangsu Beiren Robot System Co. These companies have defected from Beijing’s New Third Board and applied for a listing on the new tech board. In the coming months, we are expecting to see more companies shifting to the new tech board.

Capital Market Reform

This current trend of companies defecting is undermining the potential of the new tech board in Shanghai, which is considered by some economists as the most significant reform to hit the capital markets in China.

Now, as asset managers are launching new tech board funds, retail investors are rushing to open up trading accounts. But one of the first warnings by economists is that the new capital market being introduced is going to follow the boom-bust cycle that the OTC board experienced earlier on with the existing New Third Board.

After the successful launch of the New Third board in 2013, the market became a ghost town because companies that were expected to list never listed; the New Third Board never took off as anticipated.

Low Liquidity

It is now estimated that 428 of the 10,407 companies that are listed in the New Third Board can shift to the new tech board.

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