Shanghai Stock Exchange Planning Startup Market

The Wall Street JournalThe Shanghai Stock Exchange is on track to inaugurate a new market for small, innovative companies as soon as this year, which will challenge the wildly successful Nasdaq -style startup board in Shenzhen, people familiar with the matter said.

Called the Strategic Emerging Industries Board, the new market will host companies in sectors favored by Beijing for building an innovation-driven economy, including computer science, information technology, renewable energy and bioscience, the people said.

The plan has received the blessing of China’s securities regulator and could be in place by the end of this year, setting up a direct challenge to Shanghai’s smaller rival, the Shenzhen Stock Exchange, and its ChiNext market, which is up 126% in 2015. “The new board in Shanghai will certainly pose a threat to ChiNext,” said one of the people.

The exchange would launch after China formally switches its approval system for initial public offerings to allow corporate leaders and market conditions, rather than regulators, to determine the size and timing of IPOs. China’s National People’s Congress is widely expected to approve the changes to the Securities Act in October.

The new regulations would be in line with President Xi Jinping ‘s pledge to let market forces, instead of the state, play a more decisive role in the world’s second-largest economy.

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