China has scrapped profitability requirements for companies seeking to list stocks on Shenzhen’s technology-focused ChiNext market, kicking off a battle for start-up listings following the high-profile launch of Shanghai’s Star Market earlier this year, reported the Financial Times.
The China Securities Regulatory Commission announced on Friday that it was removing rules demanding that companies seeking an initial public offering on the tech-heavy ChiNext board, which is run by the Shenzhen Stock Exchange, must first report profits for two consecutive years.
“There is certainly real competition [between the two markets], that’s undeniable,” said Gerry Alfonso, a director at Shenwan Hongyuan Securities in Shanghai.
Alfonso said relaxing ChiNext’s listing regime made sense in light of relaxed requirements for profitability introduced by the Shanghai Stock Exchange’s new Star board, which launched in July with the backing of Chinese president Xi Jinping and was hailed by state media as the country’s answer to New York’s Nasdaq. ChiNext has raised $3.6 billion from IPOs this year, while Star has outstripped it with $8.7 billion since launch.