China’s IPO reform: A double-edged sword

Shanghai’s new technology innovation board is set to apply a new IPO system that focuses on information disclosure. But public investors are likely to face many hidden risks.

The One Country, Two Systems regime has helped to maintain the impression since the late 1990s that while the Chinese mainland is ruled along one-party-led socialist lines, Hong Kong and Macau remain out-and-out capitalist free markets.

Now a new form of One Country, Two Systems is brewing at a stock market level.

The Shanghai Stock Exchange said last week that it has received the first listing applications for its technology innovation board a new Nasdaq-style startup board for fast-growing companies to raise capital without having to adhere to the complex rules and financial requirements of the main board.

Behind the simpler, expedited approval process...

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