"Funding difficulty is the main challenge facing SMEs," wrote Liu Hui, fund manager at Invesco. It also comes as U.S.-listed Chinese companies face the risk of delisting amid Sino-U.S. FUNDING DIFFICULTYĬhina is launching the new exchange as part of efforts to channel more household savings into the stock market to fund innovation and economic recovery, while reducing the economy's reliance on bank lending. Currently, only Shenzhen's ChiNext, and Shanghai's tech-focused STAR Market adopts the U.S.-style IPO system. The bank added that the implementation of a registration-based IPO mechanism on the Beijing exchange paves the way for the rollout of the listing system on China's main boards. "This is a step forward in capital market reforms, as it enhances the multi-layered capital market system and direct financing," Morgan Stanley said in a note. HKEx (0388.HK) shares dropped more than 2% on Friday and Shenzhen's ChiNext (.CNT) fell over 1%, both underperforming the broader market.īut shares of brokerages, including Northeast Securities Co (000686.SZ), Dongxing Securities Co (601198.SS) and Shenwan Hongyuan Group Co (000166.SZ) jumped, as investors bet they will benefit from more initial public offerings (IPOs). If that is the case, "it would increase the competition" in listings for the Hong Kong Exchanges and Clearing Ltd (HKEx), Jefferies said in a note. Neither Xi nor the China Securities Regulatory Commission (CSRC) said if the Beijing stock exchange would attract overseas-listed firms. The bourse will serve innovative small and medium-sized enterprises (SMEs), and is part of a reform of Beijing's New Third Board. Xi unveiled plans for the new exchange in a video address at the opening of a conference late on Thursday. ![]() ![]() Although it was good news for the economy, it boded ill for the market in the short term because "after all, it diverts capital away from Shanghai and Shenzhen markets."
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