ChiNext Puts Reform To Test As 18 Firms Launch Stellar IPOs

by StartupWorld Staff         

The officials and the experts say that China's reformed Shenzhen's startup board ChiNext was put on the test to see the performance amid the steady market. On 24th August 2020, China has put up the efforts to make its capital market more encouraging technological innovation for landmark progress.

On 24th August 2020, ChiNext's very first group of 18 firms got its listing under the registration-based initial public offering (IPO) system making a stellar debut. It surges between 43.1% and 1,061.42% from their issued prices. As a whole, the ChiNext board has leaped as brightened investor sentiment, with the ChiNext index up 1.98% to close at 2,684.63 points.

In April, China has announced a multistage plan to test a registration-based ChiNext reform. With administrative registration, the reform aims to replace regulatory IPO approval, giving the market a greater hike in IPOs and making equity financing smoother for various tech firms.

In July 2019, after Shanghai's STAR Market had newly launched its board as a system, the new ChiNext listings touch the mark of the first time existing board in China-based A-share market under the listings registration-based IPO system.

ChiNext Puts Reform To Test As 18 Firms Launch Stellar IPOs

Vice-Premier Liu He stated that ChiNext's registration-based reform serves the smooth implementation as a significant push toward enhancing economic circulation and the capital market system.

In the written address of ChiNext's first 18 firms, Liu He said that on the STAR Market, the ChiNext reform has learned from the registration-based system, leading the groundwork for the system implementing the SME board and the mainboard that targets small and medium-sized firms.

Liu He added that he hopes that ChiNext will better serve innovative enterprises, high-growth, and startups, complementing and supporting other submarkets by more quality firms getting listed in mainland bourses.

The expert says that with more easy listing standards and a smaller and more transparent IPO process. ChiNext would test if it is practical to create a copy of registration-based reform around all A-share facilitates and submarkets and the financing of all the innovative firms.

On 24th August 2020, ChiNext's one of the 18 companies debuted, San Francisco-based electronics retailer Anker Innovations CEO Yang Meng said that the registration-based reform had injected a new growth momentum into the firm along with boosting confidence in its development.

The Changsha-based smartphone accessories manufacturing has bagged 2.7+ billion yuan ($391 million) from the ChiNext IPO. As per the Shenzhen bourse, the first group of 18 registration-based IPOs has lifted 20.06 billion yuan altogether.

On Monday, multiple improvements in ChiNext trading rules has taken effect, which included doubling the fluctuation limit of the daily price of all ChiNext shares to 20%, excluding new listings. On the same day, 4 of the stocks of ChiNext has hit the upper limit, while none dropped to the lower limit.

Guangdong province-based Yuekai Securities's chief market analyst, Yin Yue, said that the loosened limit makes the higher volatility possible. While ChiNext is expecting to maintain steady performance in the near future as ChiNext stocks' recent correction has restricted the room for a further market slide.

Over the long term, the relaxation trading rules will be clubbed with registration-based reform to offer a more significant role to the market in nurturing and selecting the quality firms, Yin Yue said.

Shenzhen Stock Exchange Party secretary and chairman Wang Jianjun said that ensuring the steady market development has always been an essential precondition for launching ChiNext reform. The exchange would need more effort to establish itself into a world-class exchange, which features topnotch service for high-tech companies and growing innovative startups.


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