China to deepen reform of Shenzhen’s ChiNext board, regulator says

BEIJING/SHANGHAI, March 6 (Reuters) – China’s securities regulator said on Friday that reforms for ChiNext, Shenzhen’s startup board for growth companies, were largely complete, as Beijing steps up efforts to funnel more financing to homegrown tech champions.

Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), told a news conference that the board would adopt more precise and inclusive listing standards to support quality innovative companies seeking to go public.

He added the reforms would be announced when ready.

The remarks came on the sidelines of the annual meeting of the National People’s Congress, China’s parliament, where Beijing has pledged to boost financing for technology and innovation as competition with Washington over semiconductors, artificial intelligence and other advanced technologies intensifies.

Wu said the regulator would replicate successful reforms at Shanghai’s STAR Market and apply them to ChiNext. The key focus would be introducing a pre-review IPO mechanism for qualified, high-quality innovative companies, particularly those that have achieved breakthroughs in critical core technologies, to shorten the waiting period for companies seeking to go public.

The reforms would also allow qualified companies already under regulatory review to raise additional capital through share placements to existing shareholders, and would optimise pricing mechanisms for new share issuances, Wu added.

“This will better serve the development of local economies and the private sector,” Wu said.

The CSRC had previously said it would reform ChiNext, but had not given details.

Separately, China will set up a national-level merger and acquisition fund to expand financing channels for startups, said Zheng Shanjie, head of China’s top economic planner, the National Development and Reform Commission.

Wu also said China would extend the light-asset, high-research-and-development intensity recognition criteria — currently applied to the STAR Market and ChiNext — to the broader main board market, signalling a wider push to accommodate more innovation-driven companies across China’s stock exchanges.

China’s financing structure is undergoing profound changes, Wu said.

During China’s 14th Five-Year Plan period, stock and bond financing on exchange markets reached 64 trillion yuan ($9.3 trillion) by 2025, with the share of direct financing rising to 31.97%, up 3.2 percentage points from the end of the 13th Five-Year Plan period in 2020.

($1 = 6.9042 Chinese yuan renminbi)

(Reporting by Kevin Yao, Yukun Zhang, Ziyi Tang in Beijing and Samuel Shen in Shanghai. Editing by Clarence Fernandez and Mark Potter)