Shanghai bourse conducts trials of platform to provide more financing channels for firms

The Shanghai Stock Exchange said a second systematic dry run for the science and technology board will be held on Saturday at a time of renewed investor confidence in the A-share market after a period of volatile trading caused by trade friction with the United States.

The dry run will test the performance and capacity of the bourse's bid-match platform, comprehensive business platform and member counter system. The first test run was held on May 11.

The benchmark Shanghai Composite Index rose 0.58 percent to close at 2955.71 points on Thursday while the Shenzhen Component Index climbed 0.37 percent to close at 9293.32 points. Rare earth, nonferrous metal and plantation sectors fueled the increase.

The Shanghai index has gained 1.8 percent over the past four trading days of the week and the Shenzhen index was up more than 2 percent during the same period.

Yang Delong, chief economist at the Shenzhen-based First Seafront Fund, said the rebound was mainly led by consumer companies, a possible sign the gyrations seen over the last 10 days may be coming to an end. The negative impact from other markets appears to have waned, and the upward trend in the A-share market has not changed.

"The upcoming science and technology innovation board will make a great difference to the A-share market by piloting a registration system and implementing a much stricter delisting mechanism. More qualified companies will be able to go public, which is for the long-term good of the A-share market," he said.

But Cui Hong, chairman of Shenzhen Wanquan Zhice Business Consulting, suggested that companies with the intention to go public on the new tech board - most of which are in their very early days - need to do enough preparation in their business model and their brand.

"As the information disclosure regulations are quite tight, it is better to make the market and investors have a good understanding of their technologies and development path to avoid any possible problems during the listing process," she said.

A total of 109 companies have sent their applications to be listed on the new tech board, of which 22 applications have been dealt with and 86 have gone through the stock exchange's vetting system. Only one company has seen its application suspended due to the need for revised materials.

Xu Feng, chief strategist at TF Securities, said the approvals process has been transferred from the administrative authorities to the various market entities. The regulation on information disclosure for the new tech board will be the most strict in A-share history, which should point to the higher quality of the companies listed here.

Zhao Haizhou, associate partner of Deloitte's A-share department for the East China area, said the new tech board will be extremely attractive to the "hard technology" companies.

Those companies have found it quite difficult to seek financing from banks because most of them have minimal assets at this time. As a result, they have to seek financing from venture capitalists.

"The new tech board will provide a more convenient financing channel for technology companies. This would allow investors to not miss the opportunity in another rising company such as (the case with) Alibaba," said Zhao.