Guangdong to launch its own STAR Market

Not usually one to play catch-up to Shanghai, Guangdong has announced it is getting its own Science and Technology Innovation Board, otherwise known as a STAR Market. 

Shanghai launched the first STAR Market on July 22. Its first day of trading made national headlines as share prices soared, but they came down in the subsequent days as traders locked in early profits. 

Now, it has been decided that Guangdong is following suit, under guidelines released by the central government earlier this year aimed at boosting innovation by making it easier for small and micro enterprises to raise equity on regional exchanges.

The provincial government published a notice last week, September 3, relating to “Supporting of Innovation Reforms”. It said that the Science and Technology Innovation Board (STAR Market) will be established in the Guangdong Equity Exchange this year, and will have 300 companies listed on it by the end of next year.

The Guangdong Equity Exchange should not be confused with the Shenzhen Stock Exchange, however. It is the province’s manager of all equity exchanges, based in Guangzhou’s Huangpu district. The Shenzhen Stock Exchange is run separately, due to the city’s special status. The Guangdong Equity Exchange was only established earlier this year, taking over the operations of all other equity markets that had previously been operating as limited-liability companies. 

As reported by the provincial news portal, the STAR Market mainly supports technology-based SMEs in the fields of investment and financing services, exploration of financing channels, training services and so on. It is expected that these SMEs will “realize their market value” without the government’s support in the future, i.e. become fully public companies. 

The concept of the STAR Market was proposed last year, and its establishment was always intended to be carried out nationwide after the publication of the “Notice of Innovation Reforms” by the general office of the State Council in January this year.

That is not all that has been planned for Guangdong. On Wednesday, Guangzhou hosted an opening ceremony for the South Center of the Shanghai Stock Exchange. It will be based in the Tianhe district of the provincial capital – not Shenzhen – and will further extend its services to other parts of southern China, apparently. 

According to local media, the South Center aims at “integrating resources, providing financial services and preventing regional financial risks” for the southern region. The Guangzhou government also signed a memorandum of cooperation with the Shanghai Stock Exchange for promoting the internationalization of the center.

Training courses for Shanghai’s version of the Science and Technology Innovation Board were held on the opening day, helping to clarifying confusion surrounding regulations of the new board. A total of 35 enterprises have already declared their intention to be listed on the Shanghai Main Board or the Science and Technology Innovation Board since the establishment of the South Center.

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