Over the past two decades, China has tried to replicate most of the things that have worked in the United States and by doing so; the country has eventually grown into the world’s second-biggest economy. Even though the two nations are now involved in a bruising trade war, China’s appetite for inculcating the things that have worked in the US has not diminished. Last year, the Chinese President Xi Jinping had announced that the country was going to have its own NASDAQ style trading venue for startups and in less than 12 months, trading is going to commence there from Monday next week.
The enthusiasm for the venue was second to none and as many as 100 startups had applied to be listed in the exchange. Eventually, only 25 of them have been allowed to go public on this new platform. The endorsement received by these companies from influential officials also led to high demand and firms have already managed to bring n $5.4 billion. According to reports, that sum is a fifth more than what the firms expected to raise. It has also led to concerns from some analysts who feel that companies are being overvalued. An analyst who works for Bright Smart Securities stated,
“The first-batch listings are expected to be boosted by investor demand. There’s a good chance we’ll see a rush into these stocks due to the limited supply.”
The opening up of this new NASDAQ style exchange known as the STAR Broad in Shanghai is an attempt by the Chinese establishment to ensure that the biggest companies in the country list domestically. Startups are developing fast in China and the government is unwilling to lose to exchanges in New York or London when it comes to those listings. Companies like Tencent and Alibaba had massive initial public offerings, both of which took place outside China. Some of the firms that are being listed have already been listed on exchanges in Hong Kong, but this is an opportunity company would not want to pass over.