China is moving closer to a full market economy with the establishment in Shenzhen of a Chinese Nasdaq.
"China proposes its own Nasdaq-like growth board in Shenzhen this year to help finance start-up companies, Premier Wen Jiabao reaffirmed yesterday at the National People's Congress session"
This is good news for Chinese start-ups who are looking to financial access. Most of the companies in the Shanghai or Shenzhen Stock Market are State-owned enterprises (around 75%).
You can find Foreign Equity Investors willing to invest on Chinese start-ups; however, the market is still in is infancy when you compare it with European or US financial markets. In addition, in some industries, Foreigners have limited access or it is prohibited to invest in it. For instance, since December 1st, 2007 and the publication of the guide on Investement for Foreign Investors, it is prohibited to invest in real estate.
Chinese companies may therefore be left with good ideas and business plans but will not have the financial strength to pursue their development.
From a personal point of view I am disappointed the Chinese government has chosen Shenzhen to establish a Chinese Nasdaq. I am sure Shanghai will come with some ideas to set up is own one. I favour the set-up of stock exchange in Beijing because Nasdaq companies are mainly working in the IT sector and Beijing with its Zhongguancun High Tech Park is full of IT companies in need of financial support. Also, by establishing a Beijing Nasdaq it may diversify where the money is, not only in Shenzhen and Shenzhen. It would be a bold move but I don't think the Chinese government will listen to me.
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