(Yicai Global) Nov. 5 -- China will establish a tech innovation board in Shanghai and experiment with a registration system for companies going public, Chinese President Xi Jinping said at the opening of the international trade fair in Shanghai.
The establishment of the board aims to make up for the shortcomings of tech innovation in the capital market, the China Securities Regulatory Commission said in a Q&A article on its website today. Xi spoke at the China International Import Expo that will last until Nov. 10.
The government supports Shanghai in constructing an international financial center and a hub of science and innovation, Xi said, adding that this will steadily improve the fundamental institutions of the capital market.
The board will provide a new convenient and safe financing channel for Chinese science and technology firms, which is conducive to the growth of Chinese unicorns in a market-oriented way, so that their valuation methods and levels are more in line with the global standards, said Shao Yu, the chief economist at Orient Securities.
The board will have differential requirements for profitability and ownership structure to help include more tech firms, the CSRC's spokesperson said. The new market will be independent from the existing main board.
The CSRC encourages non-institutional investors to participate by providing publicly offered funds to share the development of innovative firms. The regulator will guide the Shanghai Stock Exchange to manage the potential investors in terms of aspects such as assets, investment experience and capability of risk tolerance, so as to help them invest rationally.
The CSRC said it has sufficient legal basis to experiment the registration system as the Standing Committee of the National People's Congress, which is the permanent body of the legislature, authorized a registration-based initial public offering system in December 2015.
Editor: Emmi Laine