Companies seeking an IPO on ChiNext will no longer need to report two straight years of profits, the China Securities Regulatory Commission has decided. It made the change as the Shanghai Stock Exchange’s new STAR Market has also relaxed its profitability requirements. (Financial Times)
Talking point: The changes set the stage for competition between the two indexes. As China faces its lowest level of growth in three decades, it wants more of its companies to list domestically; by relaxing the listings process, it hopes to attract startups that take longer to reach profitability. ChiNext has featured US$3.6 billion in listings this year, while STAR has been home to listings worth US$8.7 billion since it launched in July. But the two are dwarfed by the New York and Hong Kong exchanges, where more Chinese companies tend to list due to their relatively relaxed requirements; e-commerce giant Alibaba’s 2014 New York Stock Exchange listing alone was US$25 billion.