Introducing Star Market . . .
China officially launched its high-tech board (stock exchange), dubbed the STAR Market (Sci-Tech innovAtion boaRd), nearly three weeks ahead of schedule. The new board will allow Chinese high-tech companies to raise funds on domestic capital markets. STAR touts some significant advantages, including a simplified process for vetting companies, lower listing thresholds, no limits on the pricing of initial public offerings, and no caps on first-day trading gains.
Trying to rev up a slowing tech start-up scene . . .
China’s start-up scene hit a slump after years of breakneck growth. Venture capital deals have dropped five quarters in a row, with a 62 per cent decrease in tech investment since last year. Funding for start-ups fell to 362.9 billion yuan (about C$69 billion) in the first half of 2019. The ongoing trade spat with the U.S., overall slowing of the economy, and oversaturation of the tech sector have all contributed to the current slump.
Hoping for quick gains . . .
So far, 120 companies have applied to list, and eight were approved to go public, pending final review by the China Securities Regulatory Commission. There is hope in the Chinese tech sector that STAR Market will produce quick success stories, especially as U.S.-China trade tensions spill into the technology sector. Reports of a first-mover advantages have already trickled in, with the first four firms listed set to raise a combined 4.5 billion yuan (about C$855 million), about 50 per cent more than initially targeted.