* Some 18 companies to list on Shenzhen’s revamped ChiNext on Monday
* Reforms to ChiNext focused on fast-tracking IPOs
* Reforms come as U.S. and China battle so-called tech war
* Fund managers flag tech bubble risks, scams risks
By Samuel Shen and Andrew Galbraith
SHANGHAI, Aug 21 (Reuters) – As business prepare to note on the start-up board ChiNext under a brand-new U.S.-style IPO system on Monday, China’s Shenzhen will officially challenge Shanghai for tech listings, while fanning to a “technology war” with the United States.
Some 18 companies will start to trade on the Nasdaq-style start-up board on Monday in a first round of listings. This comes after months of reforms focused on fast-tracking preliminary public offerings and increasing financing for tech companies as the United States and China defend global tech management.
Based on Shanghai’s year-old STAR Market, the expanding IPO reform will help reinforce the appeal of China’s capital markets at a time when Chinese tech companies deal with growing U.S. analysis and threat of being delisted from U.S. markets.
The reform “will develop very strong competitive forces between the two markets in attracting listing candidates,” said Wilson Chow, TMT market leader at PwC Worldwide, referring to the Shenzhen and Shanghai markets.
It might likewise add to a decoupling in between the United States and China in areas of innovation development, with possible effects for capital markets and the telecommunication and software application sectors, he stated.
” We may see a megatrend of polarisation of innovation advancement because U.S. and U.S.-aligned countries may embrace their own technology systems or utilize their own devices, while China and China-friendly nations can develop their own standards instead of a merged one.”
The Trump administration just recently enhanced limitations on China’s tech giant Huawei Technologies and approved China-owned apps TikTok and WeChat. It has actually likewise introduced an effort to exclude Chinese tech firms that supposedly present nationwide security dangers.
Under the new IPO guidelines, the Shenzhen exchange will vet IPO applications based on disclosure requirements, and business wanting to go public no longer need examination from the China Securities Regulatory Commission (CSRC).
ChiNext shares will likewise be permitted to rise or fall as much as 20%in a session, compared with 10%formerly, offering the more than 800 stocks presently noted on ChiNext more room to trade.
The reforms were based upon Shanghai’s STAR Market, which has actually ended up being the dominant listing location for tech firms in China and surpassed Hong Kong and New York as the world’s second-biggest IPO market by fundraising worth in the first half of2020
Yang Tingwu, vice basic manager at hedge fund Tongheng Financial investment, said he fretted the modifications could even more pump up China’s “huge” innovation bubble.
An index tracking Chinese IT stocks has actually leapt almost 30%this year, while China’s listed tech companies trade at roughly 60 times trailing revenues, compared to 37 at the Nasdaq.
Others worry looser guidelines could come with threats.
” A lot of alternate exchanges fail. They have problem with the truth that as you lower requirements, you also attract more fraudulent activities,” said Brian Bandsma, New York-based portfolio manager at Vontobel Possession Management.
” There’s a great deal of excellent guideline on the books in China. The issue has actually always been enforcement of that guideline.”
Chinese regulators have repeatedly sworn absolutely no tolerance of scams following a wave of business scandals. (Reporting by Samuel Shen and Andrew Galbraith; Editing by Ana Nicolaci da Costa)