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Report: China eyes new trading venue in Shanghai for biotech, high-tech firms

Chinese authorities are evaluating a proposal to set up a new stock trading venue at the Shanghai stock exchange for biotechnology and high-tech firms as early as 2019, Bloomberg News reported June 5, citing people with knowledge of the matter.

The authorities include the China Securities Regulatory Commission, the Ministry of Science and Technology and other government entities, the people told Bloomberg. The proposal is part of China's efforts to boost its domestic stock market by preventing its most promising homegrown companies from listing in Hong Kong and the U.S. In recent years, China has seen more than US$1 trillion worth of businesses getting listed on overseas exchanges, according to Bloomberg.

The proposed trading venue in Shanghai is likely to have lower thresholds for biotechnology and high-tech firms and might also waive earnings and revenue requirements, the people said. However, the market may have minimum investor thresholds to prevent some individuals from investing in risky startups, they added.

Chinese authorities are also working on other plans to boost the domestic stock market. Regulators are preparing rules for Chinese depositary receipts to allow companies like Alibaba Group Holding Ltd. to list shares onshore, Bloomberg reported. Further, they are working on plans to encourage local tech firms, known as unicorns, to debut in Shanghai or Shenzhen.