Business
UPDATED: 10:21, May 18, 2004
China aims to build its own NASDAQ
The Chinese government has just agreed to establish a new board for Small and Medium-sized Enterprises (SMEs) in its Shenzhen Stock Exchange, which is regarded as an important step for the future founding of a mature growing enterprise board, just like NASDAQ in the United States.
The establishment of a new board to promote venture investment in China has long been expected by many stock investors, but the bubble blowup of new economy in international markets and some domestic financial risks jointly contributed to the suspension of a growing enterprise board that had been planned since early 2000.
Since 2001, China's stock market has experienced a chilly "winter", deprived numerous individuals of their hard-earned money, and forced a number of local securities dealers onto the brink of bankruptcy.
Meanwhile, a series of scandals about listed companies engaged in false financial reports or other fraudulent activities further irritated domestic investors. Some angry investors sued manipulators.
The three-year bear market made it almost impossible for China to take concrete measures in this regard. Early this year the two stock markets surged immediately after the government made a call for further developing the country's capital market.
"The encouragement of venture investment and establishment of a growing enterprise board within the main board are tasks set by the Third Plenary Session of the 16th CPC (Communist Party of China) Central Committee," an official with the China Securities Regulatory Commission told Xinhua.
"The establishment of the SMEs board is an important step for the gradual buildup of the board for growing enterprises," the official said.
The new SMEs board, whose laws and regulations will be the sameas those regulating the current market, will provide financial convenience for Chinese SMEs that have difficulty in getting loans from banks, the official said.
Since the new board will not lower the current listing standards in the main board, generally speaking, no new risks will be brought into the stock market, the official said.
The establishment of the new board will inevitably enlarge the current stock market scale, so great attention will be paid by the watchdogs to new changes in the market, the official said.
The SMEs board, still as part of the Shenzhen Stock Exchange's main board, will help those high-technology SMEs with good growth prospects to be listed in the stock market, according to sources with the China Securities Regulatory Commission.
The new board, with independent operation, supervision, share codes and indexes, will provide experience for the future establishment of a mature growing enterprise board, and the Shenzhen Stock Exchange will soon publicize a series of regulations concerning the operation of the SMEs board, according to official sources.
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