CCTV9英语新闻：New strategic industries board to be removed from 13th Five-Year Plan

The launch of a new stock board for strategic emerging industries has been called into question by a report carried on the official Xinhua News Agency web site. The report says the government has decided to remove the board from the 13th Five-Year Plan. The new board was planned by the Shanghai Stock Exchange, which hasn't yet confirmed whether the change means the idea is scrapped. Wu Yina has the story. 

 

Just a few days ago the Shanghai Stock Exchange denied there was a delay in its plans for the strategic emerging industries board, which has been intended to list promising but not yet profitable companies. Analysts speculate the reason behind the delay is a hold-up in the implementation of a new stock registration system, which was planned as the basis of the new board. The securities regulatory commission says it is still studying the registration system, and that means the emerging industries board is held up as well. The idea of the new board, moreover, has not been welcomed by all market participants. 

 

"Even without the strategic emerging industries board, currently we have the main board in Shanghai, ChiNext and the SME board in Shenzhen, and also the New Third Board. It is already a quite complicated and differentiated capital market. Also, the New Third Board is going to begin using various categories of companies that list on it. Once the companies there grow stronger they can also transfer to the other three boards. But because the strategic emerging industries board was to be launched by the Shanghai Stock Exchange, the market would naturally think it conflicts with the ChiNext and the SME board in Shenzhen," said Yang Zhongning, Chinese investment consultant of Guodu Securities.

 

The strategic emerging industries board was specifically designed for companies like Media company Iqiyi and Alibaba's Ant Financial. They have innovative business models, but their current lack of profitability prevents them from listing on the ChiNext or other boards. The new board would have also made it easier for Chinese companies listed overseas to delist from foreign boards and re-list in China. With the new board out of the picture, companies wanting to do that will now have to join the long line of companies awaiting government approval to list on the current boards. 

 

"Some may need to line up behind six hundred other companies waiting for an IPO, this would be their first choice. Or they could choose a backdoor listing. However, backdoor listings have the same requirements as an IPO. If these U.S. listed companies cannot meet the standards, they would need to work on their qualifications first, and that will further delay their listing," Yang said.

 

Without the option of a full board for strategic emerging industries, these companies will have to rely on the older methods discussed by Mr Yang. One of the most recent companies to return from New York, the Giant Interactive Group received approval on March 3 to list on the Shanghai Stock Exchange by buying a shell company.