(Yicai Global) April 6 -- Nearly two decades after setting up a board for small and medium-sized enterprises, the Shenzhen Stock Exchange today folded the trading venue into its main board to boost efficiency.
Their business scopes had overlapped since the opening of the Nasdaq-style ChiNext in Shenzhen and Star Market in Shanghai, the bourse said in a statement on March 31.
The reasons behind the move are clear. The ChiNext and Star Market provide better financing channels for SMEs and high-tech businesses with more efficient registration, trading, and delisting mechanisms, so the latter was losing its advantages,according to Zhang Yulong, an analyst at CSC Financial.
More than 1,000 firms -- mainly in emerging industries such as electronics, biomedicine, and computers and including the likes of coatings maker Oriental Yuhong Waterproof Technology and computer vision giant Hikvision Digital Technology -- traded on the SME board, which had a total market cap ofCNY13.4 trillion (USD2.05 trillion) as of April 2. Stocks on the main board were worth CNY9.8 trillion (USD1.5 trillion).
The China Securities Regulatory Commission had approved the merger on Feb. 5.The bigger, combined board will aim to support the financing of relatively mature companies and will keep the same initial public offering rules.
Investors should not be concerned, according to experts. The consolidation should have limited impact on individual stock valuations,Zhang said.
The merger should not majorly affect trading, Gao Ruidong, managing director at Everbright Securities, told Yicai Global. Tickers will remain unchanged and only some business rules, technical systems, and IPO arrangements will be adjusted, which should little impact on operations and transactions, he added.
The Shenzhen Component Index fell 0.3 percent today to close at14,083.34.
Editor: Emmi Laine, Xiao Yi