Fund managers rush to list on Shanghai's new tech board

SHANGHAI • Chinese asset managers are rushing to set up funds targeting Shanghai's upcoming Nasdaq-style technology board, in a race likely to fuel concern that China's speculative trading culture could lead to more price bubbles.

Applications from mutual fund stock pickers exceeded 20 in the first week of submission, from managers such as Huaan, E Fund, Fullgoal and GF, according to the China Securities Regulatory Commission (CSRC) website.

The strong demand before the announcement of any potential listings, plus investors' inexperience in valuing growth-focused stocks, has raised fear of price bubbles seen on existing tech boards such as the Shenzhen Stock Exchange's ChiNext, as the new board will ease trading restrictions such as maximum daily trading limits.

"A company still needs to meet strict standards and undergo relevant procedures to list," CSRC vice-chairman Li Chao said of the quality of potential listings. "It's not as if whoever wants to list, can list."

The Shanghai Stock Exchange's "technology innovation board" is due to launch in the coming months, or even weeks, with trading and listing rules published only as recently as last Friday.

The board, announced last November, marks a radical departure for mainland Chinese markets as its registration-based listing process - akin to that used by Nasdaq - will replace regulatory vetting, and control over the timing of listings will pass to IPO (initial public offering) hopefuls rather than regulators.

It will also allow pre-profit companies to list - a concept common in the United States, which dominates tech listings, and one that was adopted in Hong Kong last year.

The board is widely seen as a government initiative to promote China's fast-growing technology sector and help counter the impact of curbs on Chinese investment in US technology.

Investment banker Liu Guangfu at TF Securities said underwriting for the new board will be "a huge challenge for investment banks in China, which have never really done the job of evaluating IPOs".


A version of this article appeared in the print edition of The Straits Times on March 05, 2019, with the headline 'Fund managers rush to list on Shanghai's new tech board'. Print Edition | Subscribe