Shenzhen to open Nasdaq-style stock market

March 19, 2008 Posted by China Briefing Reading Time: < 1 minute

Beijing set to approve second board for Chinese SMEs

Mar. 19 – The China Securities Regulatory Commission (CSRC) is set to begin reviewing listing applications for listing on the new Nasdaq-styled second board in Shenzhen, according to its chairman Shang Fulin. This begins the process of the long-awaited second board development, and brings to fruition attempts by the CSRC to develop a multi-tiered structure for investment, especially as the nations primary domestic stock markets in Shanghai and Shenzhen have been declining substantially over the past year – an event that could trigger the flight of billions of RMB from existing shares.

The second Shenzhen board will have a two-tiered application process, one for existing companies and one for start-ups. Chinese companies reporting a combined RMB10 million net profit for the past two years and companies reporting turnover in excess of RMB30 million with an increase in year-on-year sales of 30 percent will both be eligible for listing. To list on the existing main board in Shenzhen, companies must post profits for three consecutive years.

This move has been in the pipeline since 2004 when Beijing created a technology board as a rudimentary form of a Nasdaq-style bourse in Shenzhen. The existing 200 companies on the technology board will be transferred to the new second board, in a move that will transform the city’s stock market.

About 200 companies have already expressed interest in the new board.