October 25, 2019 / 1:44 PM / 2 months ago

UPDATE 1-China to allow firms to publicly issue shares on New Third Board exchange

(Adds detail, background)

BEIJING, Oct 25 (Reuters) - China’s securities regulator on Friday took steps to revive the country’s New Third Board exchange, unveiling plans to allow companies to raise money more easily, and broaden its investor base.

Qualified companies listed on the Beijing-based start-up board will be allowed to issue shares publicly for the first time, the regulator said in a statement. Currently, companies listed there can only raise money through private placement.

In addition, mutual funds and other long-term investors will be allowed to participate in the New Third Board, potentially boosting liquidity.

The move is China’s latest measure to reform its capital markets, as Beijing seeks to channel more funds into the real economy as the Sino-U.S. trade war bites.

After initial explosive growth following its inception in 2013, the New Third Board, officially called the National Equities Exchange and Quotations (NEEQ), has been struggling in recent years.

There has been a shortage of liquidity on the board, while companies have lost interest in listing there, the China Securities Regulatory Commission (CSRC) said in a statement on its website.

To rejuvenate the New Third Board, CSRC said it will reduce the cost of fundraising there, and will allow qualified companies to move to the Shanghai and Shenzhen stock exchanges.

As of the end of September, a cumulative 13,219 companies - mostly small- and mid-sized enterprises - were listed on the New Third Board, CSRC said. (Reporting by Beijing Monitoring Desk and Sam Shen; Editing by Catherine Evans and Deepa Babington)

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