Shanghai Stock Exchange mulls new board

The Shanghai Stock Exchange (SSE) is considering setting up a new trading board tailored for companies in strategic emerging industries, the head of the bourse said Tuesday during the annual session of the nation's top political advisory body.[Special coverage]

China's capital markets have been providing increased support for companies focused on strategic innovative sectors in recent years with the launch of new trading platforms such as ChiNext, Gui Minjie, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and chairman of the SSE, told the Global Times Tuesday.

But this is not enough to satisfy these emerging industries, which are of key significance to the economy's restructuring but still have limited access to the capital markets, Gui said.

Gui was the former vice chairman of the China Securities Regulatory Commission, the country's top securities watchdog, before becoming chairman of the SSE.

"We have strong resources and sufficient capacity" to set up a new trading board for companies in these strategic emerging fields, such as Internet companies, which may otherwise seek overseas IPOs in order to raise funds, he noted.

Many domestic companies riding the country's bourgeoning mobile Internet wave have tried in recent years to get listed in overseas stock markets, mostly in the US, to aid their ambitious expansion plans.

But some industry watchers said the SSE's move is mainly aimed at gaining traction in its intensifying rivalry with the Shenzhen Stock Exchange (SZSE), which has become increasingly appealing to investors.

The SSE is where most of the country's blue-chip stocks are traded, but the launch of the new board for small companies could help revitalize it, Li Daxiao, head of research at Shenzhen-based Yingda Securities, told the Global Times Tuesday.

China's blue-chip stocks have seen poor market performance in recent years, with their low valuations weighing on the SSE's average price-earnings ratio. In comparison, the SZSE, which runs ChiNext, a NASDAQ-style board for fast-growing startups, is gaining a growing profile.

By the end of February, there were 959 companies listed on the SSE, with an average price-earnings ratio of 10.73, while the SZSE has 1,578 listed companies with an average price-earnings ratio of 28.58, the Xinhua News Agency reported Saturday, citing the latest statistics from the two bourses.

Unlike ChiNext, the new platform being considered by the SSE would target larger-scale firms that have already passed the startup phase, Gui said.

The SSE head revealed that efforts are underway to design specific rules and regulations to keep the new market in line with the existing trading platforms.

The fine-tuning of policies for capital markets will revolve around adapting to companies' corporate management, equity structure and business models, Gui noted.

He gave no timetable for the launch of the new board.

Li of Yingda Securities said relevant preparations for the new board's launch are expected to begin this year, but it is unknown when the State Council will give approval for setting it in motion.