Last week’s launch of an IPO by Suzhou HYC Technology was the first for China’s new STAR market, also known as the Science and Technology Innovation Board. It’s likely the start of a period of wider choices for investors looking for China exposure, according to an investment management arm of Prudential of the UK.
The new board will create a “larger investable universe” for overseas investors looking to tap into new-economy companies, said Michelle Qi, chief investment officer of Eastspring Investment.
The board aims to attract growth companies in part through relaxed listing requirements. Among them, rather than a three-year track record of positive earnings, companies can meet one of five criteria that includes valuation, revenue, profit, cash flow, and innovativeness, Qi said. Some of the industries of interest to Qi: IT, biotech and new materials.
Prices – which are controlled to 10% daily up or down movements on China’s main boards after the first day of trade – will be allowed to fluctuate in a wider 20% range, with no limits on the first five trading days. The new board will use a registration system rather than the current approval-based system, and participation will be limited in order to reduce market volatility, Qiu said.
