The Growth Enterprises Market (GEM) will open with 28 businesses selected by regulators to debut on the Shenzhen-based exchange, including China’s first listed film company.
The market, which opens for trading on October 30, is aimed at nurturing small and medium-sized Chinese enterprises that have traditionally struggled to raise funds from a banking sector that favours state-controlled behemoths.
Beijing, which has talked about launching a market to rival the Nasdaq or London’s AIM for more than a decade, hopes that the Shenzhen GEM will spur indigenous creativity as China seeks to reduce its traditional reliance on export manufacturing.
Companies specialising in computer software, medicine, ship design and bio-engineering have been selected in the first batch of 10 initial public offerings, many of which are reported to be oversubscribed.
They have announced plans to raise almost £600m, with analysts calculating average share prices at 55 times 2008 earnings, compared with an average price-earnings ration of 36 times on China’s main boards so far this year.
Regulators also said they had installed new checks to reduce the risk of the new market driving speculation among China’s 100 million stock-broking account holders. The market is not open to foreign investors.
IPO launches in China have often followed a pattern of steep price rises followed by even steeper falls as investors took quick profits.
In the new market shares that increase or decrease by 80 per cent on its first day of trading will be suspended until 3 minutes before the market closing time.
Analysts have remained sceptical as to whether Chinese small businesses will be sufficiently strong to emulate the success of some Nasdaq enterprises.
They point to the relative failure of the Hong Kong GEM market which launched 10 years ago during the dot.com bubble period but currently has a total market capitalisation of just £6.6bn, or 0.6pc of the value of the main board.
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