Briefing: Unicorn startups go for Shanghai IPOs instead of Hong Kong
Apr 12, 2019
What happened: Three Chinese unicorns are expected to scrap their plans to list in Hong Kong in favor of Shanghai’s new tech board, which features relaxed trading rules and listing requirements announced in late January. Qingdao Haier Biomedical Co., Sun Car Insurance Agency Co. and Certusnet Information and Technology Co. gave a vote of confidence to the Shanghai stock exchange, which loosened its financial regulations pertaining to high-tech companies in order to encourage key homegrown and foreign tech players to trade in China.
Why it’s important: The Shanghai tech board marks a monumental change in China’s financial policy, waiving the valuation cap, a de facto rule since 2014 that has led many local publicly traded companies to take their business to the US or Hong Kong. It also loosens the rules on first day trading and allows for shares with different voting rights, a measure which gives founders greater control. The financial authorities’ bet seems to be working, but analysts have said the companies who are among the board’s list of 60 candidates are similar to those traded over-the-counter in Beijing. Whether big tech players will be convinced by Shanghai’s offering remains to be seen.