"It is very thrilling for me to learn that the Shanghai Stock Exchange (SSE) is about to set up a special board for China's high-tech companies," said Li Xiaojia, chief executive of the HKEX Group, an agency overseeing the Stock Exchange of Hong Kong, on Tuesday, The Paper reported.
Li noted that the latest move by the SSE, which is aimed at boosting the development of China's "new economy", will have positive influence on the country's equity market in three ways.
"First of all, it will be much easier for all market players to adjust to the new registration-based IPO rules since these rules will be tested in a newly-established and independent board," said Li, adding that by doing so, the authority will be able to minimize the impact of these new rules on the companies which have already applied for an IPO.
The second benefit, according to Li, is that the special board for high-tech companies will help the Chinese government provide support for the country's innovative high-tech companies in a more direct way.
Last but not the least, the new board will also encourage investors to appropriately conduct their expectation management when making investments. "Registration-based IPO rules (which actually lower the IPO threshold for companies) and the innovative nature of the companies to be listed on the board pose dual-risks to investors," said Li. "That requires investors to manage their expectation in a more reasonable manner."
The Chinese government announced its decision to set up the special board for China's high-tech and innovative companies during the 1st China International Import Expo (CIIE) held in Shanghai in early November.
The government hopes that the move will expedite the transition of Shanghai towards an international financial hub and a global technological innovation center as well.
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