Shenzhen bourse eyes blue-chip listings

The Shenzhen Stock Exchange, which hosts a board for small and medium-sized enterprises and Nasdaq-style start-up board ChiNext, ended 2015 nearly 65 per cent higher, compared with the start of the year.
The Shenzhen Stock Exchange, which hosts a board for small and medium-sized enterprises and Nasdaq-style start-up board ChiNext, ended 2015 nearly 65 per cent higher, compared with the start of the year.PHOTO: BLOOMBERG

Plan to resume the IPOs after 12-year gap challenges Shanghai's dominance in the area

SHENZHEN • Competition is heating up between the two main stock exchanges in China.

The Shenzhen Stock Exchange, home to China's smaller listed companies, said it aims to resume initial public offerings (IPOs) by blue-chip firms this year after a 12-year gap, crossing swords with its bigger rival in Shanghai.

Under the current arrangements by the Chinese government, the Shanghai Stock Exchange is the bourse for blue chips, while the Shenzhen exchange is positioned as the marketplace for mainly smaller firms and start-ups, having halted large-cap listings since 2004 to avoid direct competition with Shanghai.

But as Beijing accelerates its capital market reforms to give companies easier access to funding, the demarcation lines are being blurred.

Last week, China's State Council, or Cabinet, said China plans to launch a strategic industries board on the Shanghai Stock Exchange, which would potentially compete with Shenzhen for smaller listing candidates.

The Shenzhen exchange said in a statement yesterday that it plans to "resume IPOs on the main board, in a bid to aid restructuring in state-owned enterprises, and cultivate more blue-chip firms".

It was not clear whether such a plan has been submitted to the central government, or whether approval has been obtained.

The Shenzhen exchange could not be contacted immediately for comment.

The bourse, which hosts a board for small and medium-sized enterprises and Nasdaq-style start-up board ChiNext , said it also plans to lower the listing threshold so that loss-making firms and overseas-listed Chinese firms can float there.

The exchange also said it will seek to launch the Shenzhen-Hong Kong Stock Connect "as soon as possible".

Rival Shanghai Stock Exchange launched a similar cross-border equities investment scheme, the Shanghai-Hong Kong Stock Connect, more than a year ago.

The Shenzhen exchange also plans to launch options products based on certain indexes, and is studying the launch of cross-broader fixed-income products, it said.

Both stock exchanges went through a roller-coaster ride last year, with speculation pushing both indexes to near record highs in the middle of the year.

But it all came tumbling down after the Chinese government moved to institute measures that removed the froth bubbling up.

Still, Shenzhen ended 2015 nearly 65 per cent higher, compared with the start of the year, while Shanghai was up about 10 per cent.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 01, 2016, with the headline 'Shenzhen bourse eyes blue-chip listings'. Print Edition | Subscribe