Summary of China Aims to Build Its Own Nasdaq

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China’s shift from a manufacturing to a service economy has hit more than a few speed bumps along the way, and one is the lack of vibrant capital-raising resources for nascent companies. But evidence shows that Chinese investors are ready to embrace tech firms and other smaller companies, whose stocks have at times outperformed state-owned enterprises on two of the country’s stock exchanges. Investment expert Ken Davies looks at the prospects for China’s own Nasdaq and offers some ideas on how exchanges for small to medium-sized companies may evolve. getAbstract recommends his eye-opening article to investors and executives interested in China’s changing investment landscape.

About the Author

Ken Davies is the founder and president of Growing Capacity Inc., an investment consultancy.

 

Summary

The launch of stock exchanges to trade the securities of small and medium-sized firms may signal a sea change in how new companies access private capital in China. But is this a lasting trend? And how prepared is China to help these firms take the next step?

Small companies in technology and other industries trade on the Small and Medium-Sized Enterprise (SME) Board and the ChiNext. SME started trading in 2004 and has $81.8 billion in total market capitalization, while ChiNext began in 2009 and has a market cap of $31.8 billion. These are small-fry boards compared to China...


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