Caixin
Mar 05, 2019 04:17 AM
FINANCE

China’s High-Tech Board May Tap Almost $45 Billion

Photo: VCG
Photo: VCG

Analysts estimated that about 300 billion yuan ($44.7 billion) of capital will be available to invest in China’s coming Nasdaq-style high-tech board.

As of Monday, 18 fund managers submitted applications to the securities regulator for a total of 36 themed funds designed to invest in stocks to be listed on the new board being launched by the Shanghai Stock Exchange.

The 36 funds and more than a dozen more funds expected soon are estimated to have a total of 100 billion yuan of capital, on top of another 100 billion yuan from six strategic equity funds set up last year by six large Chinese money managers to invest in Chinese unicorn stocks, according to estimates by the fund research center at China Galaxy Securities.

In addition, some mutual funds also have about 100 billion yuan that could be allocated to the new board listings, according to China Galaxy Securities.

The high-tech board was announced in November by President Xi Jinping and will test a registration-based system for initial public offerings. The system would simplify the lengthy approval process that companies must now face before floating shares on the mainland market.

The sectors encouraged to seek listing on the high-tech board include semiconductors and integrated circuits, artificial intelligence, solar and wind power, new-energy cars and biotech, according to guidelines the exchange released Sunday.

In a final version of rules governing the new board released over the weekend, the China Securities Regulatory Commission (CSRC) set the bar for eligible individual investors relatively high. Individuals who want to buy stocks listed on the high-tech board must have had a daily average balance of at least 500,000 yuan in their securities accounts over the previous 20 trading days before filing an application to open an account to trade on the new board. They must also have a minimum of 24 months of experience trading securities.

There are some 3 million individual A-share account holders who meet the investment requirement. The exchange said investors who fail to meet the requirement can buy shares listed on the high-tech board through mutual funds.

Applications for the themed funds were submitted within the last 10 days. The CSRC usually takes about 20 business days to review applications.

Among the 18 fund managers, Shanghai-based Wangjia Asset Management Co. applied to offer four funds. Others included: Beijing-based China Asset Management Co., one of China’s biggest fund managers; Guangzhou-based GF Fund Management Co.; and Shenzhen-based China Southern Asset Management Co. Each of those plans three funds.

Eleven of the 36 themed funds would be closed-end funds. Caixin has learned that the funds will be similar to the six strategic equity funds aimed at attracting long-term investment.

The managers of the six strategic equity funds are among the 18 fund managers that applied to set up themed funds. They are China Asset Management, China Southern Asset Management, Guangzhou-based E Fund Management Co., Beijing-based Harvest Fund Management, Shanghai-based Huitianfu Fund Management Ltd. Co. and China Merchants Fund Management Co., a subsidiary of China Merchants Bank.

The six strategic equity funds were set up last June with the original plan of investing in China depositary receipts (CDRs) of tech giants including Alibaba Group Holding Ltd. and Baidu Inc. But after the CDR program stalled amid deteriorating market sentiment, the six funds then invested in safe bets such as bonds and interbank instruments.

Contact editor Yang Ge (geyang@caixin.com)

 

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