Shanghai tech board prepares for liftoff as Suzhou HYC starts roadshow
Will a good Shanghai tech board be bad for Hong Kong?
On Friday, Suzhou HYC set off on a roadshow for a landmark IPO: the very first to take place on Shanghai’s technology board for innovative companies, also known locally as the Star market.
How does this differ from any other mainland Chinese listing? Principally through the process of price discovery. Normally, there is a ceiling on a domestic IPO price – set by the China Securities Regulatory Commission (CSRC) – of 23 times earnings. That ceiling won’t apply on the tech board, and so a genuine price discovery process will take place from June 21 to 24, with pricing on June 25.
Also, most A-share listings are dominated by retail investors. Since the price has been held low by the CSRC rule, and mainland retail tend to adopt a pack mentality, the result is that usually any new IPO sees its share price go through the roof, regardless of its merits. On the tech board, only institutional and qualified retail investors will be allowed to take part. The hope is to bring some prudence and reason to the way equities behave in China.
Suzhou HYC will be the first of many.