Google owes much of its existence to the Nasdaq. By making venture capital available for enterprises in their early stage, the New York-based stock exchange, known as the pioneer of the growth enterprise market (GEM), has fostered giants like Intel, Apple and Google.
Next Friday, China will get its own Nasdaq-styled board. But, can it make another Intel or Google? Many believe the board is a milestone, but the government must work to create a better business environment and intelligent investors.
After a 10-year wait, the China Securities Regulatory Commission, the country’s securities regulator, announced hat trading on the second-board stock exchange, a Nasdaq-style GEM, will open next Friday.
The first batch of 28 start-up companies will publish registration statements on the Shenzhen bourse October 26 before going public, chairman of the commission Shang Fulin said.
The second-board is designed to help small and medium-sized enterprises to raise money, as it emphasizes the growth potential more than the profitability. Previously, innovative companies were trapped by a lack of funds as most of them did not qualify for bank loans.
Xinhua reported the 28 companies, which include pharmaceuticals, new energy, software and electronics, would raise a combined 15.5 billion yuan, more than double the amount planned.
Among them, the listing of Huayi Brothers Media, the country’s wellknown film company, demonstrates the government’s recent encouragement of companies in the culture industry to seek public funds to boost their size and quality.Meanwhile, for the possible speculators, Shang warned that the GEM-listed firms pose greater risks than the Shanghai stocks, including a greater likelihood that their share prices may be manipulated.
