The capital market is moving towards the "new" and empowering technological innovation with precision.

Reporter Tian Peng

Recently, the State Council issued the "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Capital Market" (hereinafter referred to as the "New 'Nine Articles'"), which aims to promote the deepening and solidification of the stock issuance registration system, enhance the competitiveness of the capital market system, improve the inclusiveness towards new industries, new business models, and new technologies, better serve national strategic implementations such as technological innovation, green development, and state-owned enterprise reforms, as well as the growth and development of small and medium-sized enterprises and private enterprises, and promote the development of new productive forces.

"The new 'Nine Articles' and related rules will further promote the support of the capital market for technological innovation." Dong Zhongyun, Chief Economist of China Aviation Securities, stated in an interview with Securities Daily, "Firstly, in terms of listing conditions, it will raise the standards for the main board and the Growth Enterprise Market (GEM), improve the evaluation criteria for the science and technology innovation board, and strive to meet the financing needs of science and technology innovation enterprises as much as possible. Secondly, it encourages and supports science and technology innovation enterprises to achieve industrial integration and technological upgrading through mergers and acquisitions. At the same time, it strengthens the regulation of information disclosure for science and technology innovation enterprises, establishes a more flexible and market-oriented delisting mechanism, and promotes the standardized operation of science and technology innovation enterprises."

Enhancing the adaptability and guiding function of listing conditions

The capital market provides important financing opportunities and liquidity management tools for technology innovation enterprises, which are particularly crucial for technology companies in the early and growth stages.

According to Wind Information data, this year, the capital market has provided a total of 26.324 billion yuan in initial financing support for 35 strategic emerging industry enterprises.

The person in charge of Nova Nebula Company told Securities Daily that the company's original intention to enter the capital market was to seek greater growth opportunities. By raising 1.629 billion yuan through the initial public offering, the company has provided support for subsequent research and development investment, market expansion, and other development plans, effectively promoting the high-quality development of the company's business. At the same time, it has also increased the company's visibility and brand image.

For many start-up companies, appropriate listing conditions and sector positioning are important for matching the development of capital resources. Under the guidance of the new "Nine Articles," the stock exchanges have revised relevant rules to enhance the adaptability and guiding function of listing conditions and sector positioning.

Taking the GEM as an example, the revised "GEM Stock Listing Rules" moderately raised the net profit indicators for the first set of listing standards, increasing the net profit indicators for the last two years from 50 million yuan to 100 million yuan, and adding a requirement of no less than 60 million yuan in net profit for the last year, highlighting the company's ability to withstand risks. It also moderately raised the expected market value and income indicators for the second set of listing standards, increasing the expected market value from 1 billion yuan to 1.5 billion yuan, and the last year's operating income from 100 million yuan to 400 million yuan, supporting companies that meet the requirements of the GEM in terms of scale, industry, and development stage to go public.

For growth-stage companies, in order to help them achieve resource integration through mergers and acquisitions, enhance market competitiveness and innovation capabilities, the new "Nine Articles" proposes to intensify the reform of mergers and acquisitions, and take multiple measures to invigorate the mergers and acquisitions market. To this end, the stock exchanges have revised the "Management Measures for the Listing Review Committee and the Mergers and Acquisitions Review Committee," appropriately relaxing the application scope of the science and technology innovation board and the GEM for small and rapid financing, allowing the use of supporting financing for cash consideration in this transaction, and optimizing the supporting financing amount to "not exceeding 10% of the audited net assets of the listed company at the end of the last year," supporting listed companies in enhancing investment value through mergers and acquisitions, and so on.

In the view of Liu Xiangdong, Chief Analyst of Dongyuan Investment, the revised management measures of the stock exchanges provide more convenient conditions and standardized operating procedures for the mergers and acquisitions of listed companies. Companies in the growth stage can more effectively integrate and utilize various resources such as technology, talent, and funds through mergers and acquisitions, and expand their market share, enhance their control over the market, and further improve their profitability and market competitiveness.

Building a diversified capital market product system

The institutional optimization and improvement provide strong guarantees for the aggregation of innovative resources for technology companies. At the same time, the new "Nine Articles" also explicitly proposes to further facilitate the "raising investment, managing withdrawal" cycle, and play a good role in supporting technological innovation through venture capital and private equity investment. It also promotes the high-quality development of the bond and Real Estate Investment Trusts (REITs) markets, and the steady, prudent, and orderly development of the futures and derivatives markets.

Dong Zhongyun told Securities Daily that with the rich and diverse product system of the capital market, it can provide comprehensive financial support for technological innovation, thereby promoting the accelerated implementation of technological achievements and the rapid development of new productive forces.

Specifically, "venture capital and private equity provide crucial sources of funding for early-stage technological innovation, supporting technology research and development and market promotion. Meanwhile, the development of the bond and REITs markets can provide long-term and stable financing for infrastructure such as technology parks and research centers. In addition, the maturity of the futures and derivatives markets helps technology companies effectively manage raw material costs and exchange rate risks, enhancing the risk management capabilities of enterprises," said Cheng Fengchao, a member of the Academic Advisory Committee of the China Listed Companies Association and President of the Zhongguancun Guorui Financial and Industrial Development Research Institute, in an interview with Securities Daily.

In May 2022, the emergence of innovation bonds, as an example of bond products, aims to facilitate the precise and efficient flow of funds from the exchange bond market into the field of technological innovation, in order to better leverage the positive role of the bond market in serving the national innovation-driven development strategy and industrial transformation and upgrading.

Cheng Fengchao believes that through this diversified product system, it can not only provide financial security for technology companies at various stages of development but also help these enterprises to more effectively cope with market and technological uncertainties, promote their continuous innovation and growth, and thus achieve efficient allocation of capital and deep integration of technological innovation.

Looking ahead, Liu Xiangdong told Securities Daily reporters that under the guidance of the new "Nine Articles of the State," he looks forward to further improving the bond issuance and trading mechanisms, reducing financing costs, promoting the standardized development of the REITs market, and attracting more long-term capital investment in the field of technological innovation in real estate projects.

Clear market expectations with improved sector positioning

In fact, whether it is the improvement and optimization of the system or the diversified development of the product system, fundamentally, it cannot be separated from the fundamental requirement of improving the multi-level capital market system. To this end, the new "Nine Articles of the State" proposes to adhere to the development of the main board, the science and technology innovation board, the growth enterprise board, and the Beijing Stock Exchange, deepen the reform of the New Third Board, and promote the standardized development of regional equity markets.

At the same time, the Shanghai and Shenzhen stock exchanges have also revised relevant supporting rules to further improve sector positioning and clarify market expectations.

Specifically, in the main board market, the revised "Stock Issuance and Listing Review Rules" of the Shanghai and Shenzhen Stock Exchanges further specify the positioning of the main board as "large-cap blue-chip" from the dimensions of industry status, performance scale, core technology and processes, industry development trends, and operational stability, highlighting industry representation, adding technological elements, and explicitly requiring issuers and sponsors to evaluate and judge the positioning of the main board.

At the same time, in the science and technology innovation board, the Shanghai Stock Exchange revised the "Interim Provisions on the Declaration and Recommendation of Science and Technology Innovation Board Enterprises for Issuance and Listing," further improving the positioning and standards of the science and technology innovation board, and supporting and encouraging "hard-tech" enterprises to issue and list on the science and technology innovation board. As for the growth enterprise board, the Shenzhen Stock Exchange has improved the relevant requirements for the positioning of the growth enterprise board, further clarifying the logic and standards for grasping the "three innovations" and "four news" of the growth enterprise board from the perspective of promoting the development of new quality productivity, and moderately increasing the relevant indicators reflecting the growth potential of innovative enterprises. The Beijing Stock Exchange has made adaptive adjustments to the relevant rules based on the market positioning of serving innovative small and medium-sized enterprises.

In Liu Xiangdong's view, the improvement of the listing conditions for the main board by the stock exchanges, as well as the further clarification of the positioning and standards of the science and technology innovation board and the growth enterprise board, will help optimize the capital market structure, highlight the characteristics and advantages of different sectors, better meet the financing needs of technology innovation enterprises at different stages, and promote the rapid growth and expansion of technology innovation enterprises.

Cheng Fengchao stated that the introduction of the "1+N" series of regulatory policies highlights the formation of a "complementary and organic whole" in the regulatory system, which will further help science and technology enterprises to grow and strengthen. With a series of specific policy measures being implemented, it not only supports technological development but also protects the interests of investors, ensuring that technological progress and the healthy development of the capital market complement each other.