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STAR serves as ‘test field’ for reform
  • (2019-11-05)

The stable growth of China's NASDAQ-style board, the STAR Market, will continue to help the nation's capital markets expand and diversify, as the board is playing a vital role in advancing China's high-technology industry, experts said over the weekend.

Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), said that the performance of the STAR Market, which had its 100th day of trading on Tuesday, has "met expectations and shown basically stable growth," the Xinhua News Agency reported on Sunday.

The bourse has dual missions. One is to advance the innovative transformation of the country's economic development through market forces, while the other is to apply the lessons from the "experimental field" to promote fundamental, systemic reform of China's capital markets, Yi said.

Using the STAR Market as a testing ground is not just a matter of copy-and-paste, Yi said, because more effort is needed to stably promote the registration-based IPO system and improve the efficiency of resource allocation in the capital markets.

Many companies listed on the STAR Market are industry leaders, and being listed helps them build up their credibility and reputation, Yi said. "In time, [we] believe that the STAR Market can nurture great technology companies."

"[People] should have confidence, tolerance and patience" toward the market, Yi said.

The STAR Market began trading on July 22 with 25 listed companies. There are now 40 listings.

The launch of the exchange was a vital step in China's restructuring its capital market, as it will support the transformation of the country's economic structure, Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times on Sunday.

China's fast-growing technology sector needs capital, and the STAR market will help boost the development of the industry, Liu said.

The shares of each company rose by an average of 150 percent on the first trading day. As of October 31, the shares of the initial 25 companies were up 90 percent on average from their IPOs, according to the Shanghai Stock Exchange.

The number of investor accounts on the market exceeds 4.4 million. Average daily transactions stand at 14.2 billion yuan ($2.02 billion), accounting for 3 percent of the total turnover of the Shanghai and Shenzhen bourses.

"The STAR Market has gradually become the first choice for an increased number of State-owned and private companies in the technology sector to raise capital," said Wang Danqing, co-partner of Beijing-based Ruixin Zhicheng Consultancy.

Wang told the Global Times on Sunday that many start-ups that plan to get listed on the market want to increase investment in technology infrastructure, research and development, and staff development. These activities are conducive to the companies' high-quality development.

"But problems persist as some companies focus on investing more without genuine improvement when it comes to innovation and growth," Wang noted.

The CSRC moved to deepen market reform with the recent release of 12 priorities. Among those was the goal of giving full play to the role of the STAR Market as an experimental field and encouraging listed companies to enhance their quality.

Next, the CSRC will promote more opening-up measures such as revising rules related to Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor systems and further facilitate foreign institutions' participation in the Chinese capital market, according to Yi.

Global Times

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