Shanghai new industries board to draw emerging, creative business

SHANGHAI (Reuters) – The Shanghai Stock Exchange’s proposed emerging industries board will attract private capital in emerging and creative businesses, Chinese media reported on Wednesday.

The new board will also provide an exit channel for private equity and venture capital investors, Shanghai Stock Exchange vice-general manager Liu Shian was quoted saying at a forum by the official Shanghai Securities News.

Shanghai, the country’s financial hub, is facing competition from Shenzhen’s ChiNext growth board.

In March, the Shanghai Stock Exchange said it had submitted a proposal to launch a board for firms in emerging industries to China’s securities regulator.

“The strategy of the emerging industries board is to attract emerging and creative businesses, especially those that have crossed the start-up stage, that have grown to a certain size and have a clear strategy,” he was quoted separately as saying at the Tuesday event by the 21st Century Herald newspaper.

Shenzhen and Hong Kong are preparing to launch a cross-border stock investment scheme that will mimic the new Shanghai-Hong Kong Stock Connect pilot program.

Some analysts predict that Shenzhen, which hosts many smaller high growth firms in sectors such as technology and pharmaceuticals – seen as leading China’s next phase of economic growth – will cannibalize foreign investor funds from Shanghai, which is dominated by larger finance and infrastructure firms.

ChiNext <.CHINEXTC> has historically outperformed the Shanghai Composite Index <.SSEC> and has been particularly strong in recent weeks. ChiNext is up nearly 130 percent year-to-date compared to 37 percent on the SSEC.

Shanghai is trying to meet its goal of becoming a global financial center on par with Hong Kong and New York by 2020, but local officials complain that Beijing has instead moved to dilute the city’s status by encouraging the development of alternative markets in Shenzhen and Beijing.

The SSE previously said that compared with Shenzhen’s start-up board ChiNext <.CHINEXTC>, which is home to China’s smaller companies and high-growth start-ups, the new board would have a higher bar for listing candidates.

(Reporting by Brenda Goh; Editing by Jacqueline Wong)

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