China is hoping to keep the next batch of tech giants in Shanghai after losing Alibaba to Wall Street and Tencent to Hong Kong (Johannes EISELE)

Shanghai (AFP) – China will relax rules on IPOs for a planned Nasdaq-style tech board in Shanghai as it seeks to encourage start-ups to list at home after losing the likes of Alibaba and Baidu to Wall Street.

Existing rules on initial public offerings ban companies from listing unless they have a track record of profits, and put caps on their pricing and how much they are allowed to rise or fall.

But those and other constraints will be lifted or eased under rules released late Wednesday for the new technology board, which was announced by President Xi Jinping in November as China battles the United States for global supremacy in the sector.

The new guidelines, announced by the Shanghai Stock Exchange, remove the requirement of past profits as well as any restrictions on IPO pricing.

There will also be no limits on price movements for the first five days of trading, after which a daily 20 percent trading band will be imposed.

The trading band compares to the current standard 10-percent daily limits on China’s two main exchanges in Shanghai and Shenzhen, a measure aimed at curbing excessive volatility on the country’s often rumour-driven markets.

The Shanghai exchange has put the draft rules out for public comment until February 20, but proposed guidelines are rarely changed once they go public. 

A launch date for the board has yet to be given.

After Alibaba and Baidu listed years ago on Wall Street and fellow tech titan Tencent opted for Hong Kong, the government is hoping to keep a new generation of technology leaders closer to home.

In particular, China has a growing stable of “unicorns” — tech start-ups valued at a minimum of $1 billion — that are expected to list publicly, such as Alibaba-linked mobile-payments pioneer Ant Financial, ride-sharing giant Didi Chuxing, and online-services platform Meituan-Dianping.

Strict rules essentially prevented the first wave of Chinese tech giants from listing in mainland China.

But authorities are now keen to develop domestic champions into global leaders in artificial intelligence, big data, and other tech sectors in which Xi wants China to dominate. 

Analysts say Xi’s overall strategy is to harness all facets of national power — including economic and technical — to compete with the United States.

China also is mulling plans to allow foreign-listed firms such as Alibaba to offer securities in China — Chinese Depositary Receipts (CDRs) — which are linked to their main shares.

Chinese stocks gained Thursday led by tech shares, with Shanghai’s main index was up 0.63 percent by the break.

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