Shanghai’s Nasdaq-style exchange to approve 3 tech IPOs

The Shanghai Stock Exchange is poised to approve the first three listings on the upcoming Nasdaq-style Technology Innovation Board. This accelerates China’s pace of support for tech companies amid its escalating trade war with the US.

The initial public offering applications of Shenzhen ChipScreen Biosciences, Anji Microelectronics (Shanghai), and Suzhou Tztek Technology will be heard on June 5, the exchange said in a statement after the market closed Monday. This also suggests that the launch of the new board itself is nearing.

Photo credit: Aaron Goodman

“The first three companies, following rounds of examinations by exchange officials over the past two months, are set to secure a nod to launch IPOs,” said Ding Haifeng, a consultant with Shanghai Integrity Financial Consulting. “The hearing date in early June echoes speculation the new market will debut in the middle of this year.”

The three IPO hopefuls are in the fields of semiconductors, biotechnology, and artificial intelligence – key areas in which China wants to create its own world-class players. These companies are among the 110 applicants looking to list on the eagerly anticipated board.

The board was ordered into existence by Chinese President Xi Jinping in November 2018 to support domestic tech companies by easing access to capital. For the first time, it will allow unprofitable and foreign-funded companies to list in mainland China.

The China Securities Regulatory Commission (CSRC) is yet to unveil an exact date for the board’s debut, but it is believed it will be announced soon after the IPO hearings in the coming weeks.

The trade war between the US and China, the world’s two largest economies, has stretched to the tech sector, after US President Donald Trump signed an executive order barring the use of telecom equipment made by companies deemed a threat to America’s national security. Huawei Technologies, the world’s largest maker of 5G telecom equipment, has been banned.

Last week, Wu Qing, a vice mayor of Shanghai, said the city would grant financial and tax incentives to buoy domestic players in the fields of AI, biotechnology, and semiconductors because Western companies led in these core technologies.

The Shanghai exchange began accepting IPO applications for the new board in late March using a registration-based mechanism. The system requires applicants to fully disclose information about earnings and operations. Regulators will grant approvals as long as they can ensure the truthfulness of the documents submitted.

After hearings, companies that receive a green light from the Shanghai exchange can technically start raising funds on the innovation board, subject to a final approval from the CSRC.

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