China’s new small-cap stockmarket

China has announced plans to establish a new stock exchange in Beijing that will be aimed at small and medium-sized firms.

China has announced plans to establish a new stock exchange in Beijing that will be aimed at small and medium-sized firms. Mainland China already has two exchanges, says Laura He on CNN. The Shanghai Stock Exchange, founded in 1990, “hosts mostly large-cap companies, including state-owned enterprises, banks and energy firms”. Another exchange, in the southern city of Shenzhen, is more tilted towards tech companies. There is also an exchange in Hong Kong, but it is governed by a separate regulatory system. 

Many Chinese firms, such as Alibaba, have previously opted to list in the US. But they now face pressure from both China, which would prefer domestic companies list at home, and US regulators, who are tightening disclosure rules to protect investors. 

The new trading venue may be intended to signal that the recent crackdown on tech and education firms isn’t aimed at all entrepreneurs, says Jacky Wong in The Wall Street Journal. But a new market is unlikely to “move the needle much”. Smaller firms already have options to access domestic funding through Shenzhen’s ChiNext subsidiary and Shanghai’s Star Market, which was launched in 2019 to rival America’s Nasdaq. “What is really needed is a stronger commitment to corporate transparency” and rules that make it easier for firms to list in the markets that China already has.

Recommended

Julian Brigden: markets are at a huge inflexion point
Investment strategy

Julian Brigden: markets are at a huge inflexion point

Merryn talks to Julian Brigden of Macro Intelligence 2 Partners about the unwinding of the US stockmarket's super-bubble, and the risks and opportunit…
25 Jan 2022
Has growth investing had its day? Don’t be so sure
Growth investing

Has growth investing had its day? Don’t be so sure

Markets – and “jam tomorrow” growth stocks in particular – continue to crash, with some analysts forecasting a 50% drop or more. But, says Max King, a…
25 Jan 2022
A cheap investment trust with a good record
Investment trusts

A cheap investment trust with a good record

This cheap investment trust’s yield of almost 9% may look too good to be true, but should be sustainable, says Max King.
25 Jan 2022
Tax return deadline extended – but don't forget to file
Income tax

Tax return deadline extended – but don't forget to file

HMRC is being slightly more lenient about tax returns this year, but falling behind will still incur hefty fines.
25 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022