Just recently, the Shanghai Stock Exchange (SSE) unveiled its list of 9 companies that had been approved to file initial public offerings (IPO) on the proposed Science and Technology Innovation Board (STIB). So what exactly is STIB?
What is Science & Technology Board and why it matters?
The new board aims to attract both foreign and local technology firms to sell shares in the PRC. Unlike the conventional way of IPO, the new board is taking the registration rather than approval-based approach. In the past, technology giants like Alibaba, Xiaomi & Tencent have chosen to list either in the US or Hong Kong. With the newly set up technology board, the domestic investors in PRC will have easier access to such investment.
The increased number of IPOs will bring opportunities to different financial institutions in China, which will then bring more business to domestic securities firm. Assuming the new board is going to be very successful in the future, private equity and venture capital firms can sell and exit their investments more quickly due to the shortened and simplified IPO process.
How it might impact HKEX listing?
No doubt, HKEX is definitely seeing this new initiative as a new competitor as there are a lots of China unicorns that are planning to float their companies in Hong Kong Stock Exchange in the coming two years. The STIB will give an alternative to these unicorns to list on the new platform when there is any issue arising from listing in HKEX. Having said that, HKEX remains attractive to potential listing firms due to its more developed and mature stock market, less interventionist approach and free flow of capital. Let’s see if the STIB will be able to catch up in the long run.
When will STIB launch?
The board is expected to launch during at the end of May 2019. For those who are interested to invest in these innovative/ technology firms, make sure you do enough research before pouring your money in.