Beijing launches STAR, tech stock market to boost industry

In this June 13, 2019, photo released by Xinhua News Agency, guests, from left, Yi Huiman, chairman of China Securities Regulatory Commission, Liu He, vice premier, Li Qiang, top party official of Shanghai, and Ying Yong, Shanghai's mayor, celebrate the launch of the SSE STAR Market, previously referred to as the Shanghai science and technology innovation board in Shanghai. (AP)
Updated 22 July 2019

Beijing launches STAR, tech stock market to boost industry

  • China Railway Signal & Communication Co., Ltd. said it raised 10.5 billion yuan ($1.5 billion) from investors

BEIJING: Trading started Monday on a Chinese stock market for high-tech companies that play a key role in official development plans that are straining relations with Washington.
Regulators have approved 25 companies in information technology and other fields seen by leaders as a path to prosperity and global influence for the Shanghai Stock Exchange’s STAR Market.
The market, modeled on the US-based NASDAQ, reflects the ruling Communist Party’s desire to channel private capital into its development plans. It gives small Chinese investors a chance to buy into tech industries that until now have turned to Wall Street to sell shares.
The STAR Market has no direct link to Beijing’s tariff war with President Donald Trump over US complaints China steals or pressures companies to hand over technology. But it will raise money for industries some American officials see as a competitive threat to US technology leadership.
“The new board’s important role is to provide a fundraising channel for China’s scientific and technologic innovation,” said economist Lu Zhengwei at Industrial Bank in Shanghai.
China’s stock exchanges in Shanghai and the southern city of Shenzhen were set up in the early 1990s to raise money for state industry. They have expanded to include private enterprises but still are dominated by government-owned companies such as PetroChina Ltd. and China Mobile Ltd.
Companies such as e-commerce giants Alibaba and JD.com and search operator Baidu.com have raised billions of dollars on Wall Street. But foreign stock sales are inconvenient and expensive for smaller companies.
The STAR Market has more lenient standards for profitability and price volatility than the main exchanges. The Shenzhen Stock Exchange launched its own second board, dubbed ChiNext, in 2009 for small, faster-growing companies. Companies that have yet to make a profit can trade on the Shanghai tech board if they spend at least 15 percent of revenue on research and development or have drugs or other technologies in advanced development.

By contrast, the main board requires at least two years of profits before a company can join, a condition that has limited access for fledgling ventures.

Allowing companies to sell shares before they are profitable will encourage development of Chinese venture capital by allowing early investors to recover some of their money, said Lu of Industrial Bank.
Shares on the new market can swing by 30 percent in price before regulators will impose a 10-minute trading halt. The main exchanges halt trading for the day of any stock that rises or falls 10 percent in price.
In addition to companies started trading Monday, the Shanghai exchange said it was reviewing applications from 116 other ventures for initial public share offerings.
A state-owned maker of railway controls accounts for the bulk of the market’s share value. China Railway Signal & Communication Co., Ltd. said it raised 10.5 billion yuan ($1.5 billion) from investors.


Report: 2 Iranian lawmakers arrested for ‘disrupting’ market

Updated 22 August 2019

Report: 2 Iranian lawmakers arrested for ‘disrupting’ market

  • The report did not reveal if they have been charged with any financial crimes
  • Iran arrested several people since 2018 on corruption charges

TEHRAN: Iran’s semi-official Fars news agency says two lawmakers have been arrested for unspecified actions described as “disrupting” the country’s car market.
The report says the two lawmakers — Fereydoun Ahmadi and Mohammad Azizi — were initially taken to the Evin prison in Tehran but they were later released for about $85,000 in bail.
The report didn’t specify if the two have been charged with any financial crimes.
Iran is trying to crack down on corruption and has arrested several persons since 2018. Two prominent local businessmen have been hanged.
Iran’s economy nosedived since the US pullout from the nuclear deal last year. Prices of cars have skyrocketed as Western manufacturers pull out of the country and foreign-produced parts are becoming harder to find. China is trying to fill the void.