Chinese Depository Receipts Expected to Spur Listing by Innovative Tech Firms

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Observers expect the use of depository receipts in China to facilitate equity financing by tech enterprises.

The State Council approved and issued the China Securities Regulatory Commission’s “Several Opinions on Undertaking Trials for Innovative Enterprises Issuing Shares or Depository Receipts Domestically” (关于开展创新企业境内发行股票或存托凭证试点的若干意见) on 30 March, paving the way for the increased use of Chinese depository receipts for equity financing purposes.

The Opinions will allow some tech companies or enterprises in strategic emerging industries to perform listing via the issuance of either shares or depository receipts, with a focus on sectors including big data, cloud computing, artificial intelligence, software, integrated circuits, high-end manufacturing and bio-tech.

Under the Opinions certain red chip companies will be permitted to issue depository receipts on the domestic capital market in order to achieve listing.

“This is a sign that IPO’s, CDR’s as well as backdoor listing will become options for the listing of innovative enterprises,” said Wang Zhongmin (王忠民), vice-chair of China’s National Council for Social Security Fund, to Securities Daily“These three channels provide the fastest, largest and most potentially valuable securitisation scene for new supply content.”

“Over the past few days policies in relation to Chinese Depository Receipts have been released, which clearly indicates that China supports the new economy, and that reforms of the capital market system are accelerating,” said Wang Guangyu (王广宇), chair of the China Academy of New Supply-side Economics, at the China New Supply Side Economist 50 Forum First Quarter Summit and Monetary Finance Roundtable.

“China’s multi-tier capital market needs to seize upon the key issue of the quality of listing companies…enabling a greater number of innovative enterprises to list and enabling unicorn enterprises to return to the A-share market is an extremely important change.

“Only by having these kinds of enterprises to return to the A-share market will it be possible for the market’s vitality and value to continue over the long-term.”

3 COMMENTS

  1. […] According to China Banking News, tech companies look like the major focus here. “The Opinions will allow some tech companies or enterprises in strategic emerging industries to perform listing via the issuance of either shares or depository receipts, with a focus on sectors including big data, cloud computing, artificial intelligence, software, integrated circuits, high-end manufacturing and bio-tech.” That focus on technology would match other initiatives of the Chinese Communist Party, namely the country’s roadmap for technological dominance, known as Made in China 2025. […]

  2. […] China Banking Newsによれば、今回主に関心の対象となっているのはテクノロジー企業のようである。「世論は、戦略的新興産業の一部のハイテク企業や大企業が、株式の発行や預託証券を通して上場を果すことを望んでいる。そうしたことが期待される産業分野は、ビッグデータ、クラウドコンピューティング、人工知能、ソフトウェア、集積回路、ハイエンド製造業、そしてバイオテクである」。技術に焦点を当てることは、中国共産党の他の動きにもマッチするものだ。特に、同国が技術的優位性を狙うための、中国製造2025(Made in China 2015)と呼ばれるロードマップには良く合致している。 […]

  3. […] Modeled after the American Depositary Receipts, which were invented almost century ago, CDRs are a way for Chinese buyers to own offshore-listed companies’ shares in a way that fits within local securities regulations. According to China Banking News, the use of CDRs is expected to facilitate equity financing by tech companies “with a focus on sectors including big data, cloud computing, artificial intelligence, software, inte… […]

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