Four-member Forum

Is it now possible for the cacao to have a spectator on China’s capital markets and to round the nightmare of the Chinese scientific and technological enterprise, Nassak?

In recent days, the Shanghai Stock Exchange “will set up an initial board and pilot registration system” was a source of encouragement for the market, but at the same time it was disputed.

China is currently undergoing a process of economic transformation, with traditional industries, such as real estate, unable to sustain economic development as the backbone of the economy, and only scientific and technological innovations can be expected to bear the burden of economic development and national recovery in our country. Over the years, however, a number of STIs have been subject to domestic capital market requirements for profit and equity structures, with the loss of support from domestic capital markets during critical periods, and some options for circumvention and access to finance from the Hong Kong market and the United States of America’s Nasdak market. China’s capital markets have unfortunately missed the dividends of the entire generation of Internet innovation enterprises. As a result, the roll-out of the boards has been high. It is not known, however, that practical implementation results can be achieved as desired.

Initially, the entrepreneurship board and the new three panels were launched with great hope, but were in operation, making it difficult to truly play a role in supporting scientific and technological innovation enterprises. The “Strategic Emergings” programme, which has long been interrupted by “equity”, has made registration difficult for many years. In the first half of this year, the infamous Licorne CDR, which is now accompanied by stagnation in its issuance, is also in a state of distress.

Is it now possible for the cacao to have a spectator on China’s capital markets and to round the nightmare of the Chinese scientific and technological enterprise, Nassak?

Controversial 1: If there is an entrepreneurship board, is there any duplication?

This is defined by the establishment in 2009 of a deep market of entrepreneurship panels: “The market for entrepreneurship is defined as a market for small, but growing SMEs and high-technology enterprises that have marketed less than traditional stock exchanges, providing financing opportunities and developing space securities trading. What is the difference between this and the forthcoming creation market?

In terms of positioning, the boards could be lateral in comparison with the business panels, but more emphasis was placed on “innovation”. One of the largest differences from the entrepreneurship board is the introduction of registration rather than vetting.

At the beginning of the founding, the entrepreneurship board was also reputed as “Nasdak” in China, but the traditional mindset of IPO’s conditionality alone would not be profitable. And how much can STI be actually profitable? Neither the early arrival of Aliba, dengue, pertussis, or the recent listing of tenants, minus, beauty, or the large number of monopolies, such as antimony, land penitentiaries, drop-outs, etc., that are seeking to be marketed, can meet the current marketing requirements for entrepreneurship. A number of innovative enterprises with high scientific and technological content are not yet profitable in the pre-development or mid-term, or, although profitable, models are not clear. Without the support of capital markets, such enterprises are hard to develop.

The creation of a new system is essential at this stage, if it is to be done, and the pilot registration reform is the subject. In other words, if registration is not done, it is not possible for the boards to be successful.

The advantage of this pioneering system of registration is to avoid over-requirement of profits under the vetting system and to abandon an objective evaluation of the enterprise’s overall location. The current system of registration, which is no longer “net profit-up”, provides a comprehensive assessment of enterprises from five dimensions: “pure profits, liquidity, receipts, market value, assets”, assigns more judgments on enterprises to markets, selects enterprises through market-based instruments, and screens enterprises, giving them more access to support from capital markets. Of course, the premise is open, fair, equitable and complete disclosure of information.

Why is registration not practised on entrepreneurship boards, but rather a new battlefield?

In contrast to China’s reform over the past four decades, the most effective and most commonly used initiative is incremental reform, that is, the creation of new battlefields for reform on the basis of non-disturbing vested interests, with the least cost of such reform.

The roll-out and registration system will necessarily require pilots as an independent piece, separate from the mainboard and the entrepreneurship board, operating in a “two-track” manner, so that rigorous reform tests can be carried out in the boards, while also avoiding major shocks to other panels. Moreover, the successful experiences of these could be gradually replicated in the main boards and entrepreneurship boards, essentially to explore the ills of the Chinese market.

In addition, it was assumed that the boards would also allow the marketing of special equity structures, such as VIE, as well as the unit structure allowing “distinction with equity”. This will open green lights for a number of STI companies, as well as for the repatriation of Chinese shares that are listed overseas.

Controversial II: Can the cardboard not be a registration system for Maa?

“IPO not to proceed?” In 2012, shortly after the inauguration of the President of the Board of Trustees, Guo Jiabao left the staggering question. The registration system has since taken a controversial step.

The registration system for the period 2015-2016 was also expected to be rolled out together with the strategic brand, yet a “unit disaster” collapsed so that the registration plan was put in place and the “strategic nascent” was deleted from the Thirteen5 outline, and registration was rarely initiated as forgotten.

Nowadays registration is re-engaged in the face of investors, and markets are again concerned that registration pilots do not mean lowering the threshold and a large number of firms are concentrated on the market? Even many poorly qualified enterprises are also on the market? Moreover, the registration pilot, which is difficult to introduce, will not be merely a registration system with a “Marta”?

On 5 November, the Officer-in-Charge of the Board gave an answer in response to the press question - the registration system was piloted with strict standards and procedures, with more focus on the trueness of information disclosure, greater emphasis on the quality of listed companies, greater emphasis on market dynamism and greater focus on investor protection.

This means that the most difficult first step has been taken in the general direction of registration. In fact, China has done so well on the way to prepare for registration.