1. Chinese
NEEQ:
a
“future
Nasdaq”
to
fight
economic
slowdown
Published on Friday March 4, 2016 by Yanan Jing on WordPress
The little-known Chinese National Equities Exchange and Quotations (NEEQ),
usually called “New Third Board”, has been catching up growth fast. While China
is struggling with the economic slowdown, the NEEQ Board’s surge in its
fundraising brings hope to small companies in the country.
As China's newest share trading system, the market, mentioned also as Chinese
future “Nasdaq” by the media, has been one of the main financing channels for its
startups and small companies.
On March 4, the China Securities Regulatory Commission (CSRC) announced the
adoption of a new policy to divide the existing NEEQ market into two segments:
the innovative market and the basic market. “Companies in the two markets will
receive relevant regulations in order to help improve the efficiency of the board”,
declared Xiaojun Zhang, news spokesman of the CSRC. He hoped the initiative
could combat to the decline of the country’s economic development.
An emerging market
On March 3, the NEEQ's total financing reached more than 26 billion yuan (4,1
billion dollars). According to China Daily, the full turnover amount was only about
18 billion yuan (2.8 billion dollars) by the end of the year 2015.
NEEQ’s expansion is remarkable in recent years. Created in 2006 in Beijing, it
became nationwide in 2013 and really took off in 2014. The number of listed
companies has passed from 356 in December 2013 to more than 6,000 today,
overwhelming the total of 5,000 firms registered in Shanghai and Shenzhen

2. markets.
Amid the financial crisis, initial public offerings in Shanghai and Shenzhen stock
boards are still blocked. Thus, one of the country’s main concerns is rattling stock
markets this year. The blooming development of the Chinese “Nasdaq” attracts
more small businesses to join in its list.
A highly expected system
On March 2, venture-backed home cleaning booking app, eJiaJie, announced its
application into the list on the NEEQ. The Beijing-based service-booking app
recorded a loss of 30 million yuan (4.6 million dollars) during the first seven
months of 2015, according to its annual report. The company expected to see its
revenues rebound in 2016.
Not only private firms but also state-owned companies showed interests in the
newest stock market. The CITIC Press Publishing House was the first
government-owned enterprise to join the NEEQ. With the momentum gathered in
January-February 2016, the group was planning to grow its network of bookstores
and develop the online publishing service.
"The high efficiency of the NEEQ board is accelerating the expansion of the
market," said Dong Dengxin, a financial researcher at the Wuhan University of
Science and Technology, to China Daily.
A risky investment
Despite positive indicators, fears remain the structural reform aiming at reducing
industrial overcapacity. It is likely the rigorous reform in China would hurt earning
prospects to some degree, which worries especially companies in resource and
energy related activities.
"The NEEQ causes real problems because we do not know how companies

3. reward investors", said Christopher Balding, HSBC Business School in Shenzhen
in an interview with AFP.
“Are there unprofitable businesses? Certainly”, confirmed Suzie Wu, manager in
Tianxing Capital. She mentioned that the investment group remained cautious
about investing in companies listed on the NEEQ, even though the potential
benefits outweighed the risks.
To some opportunity seekers, however, the NEEQ so far seems to have avoided
the excessive valuations often seen in China. “The market is dominated by
professional fund managers’, said Yang Wenbin, founder of howbuy.com, to AFP,
“It is not like the Shanghai or Shenzhen markets driven by retail investors who
could overreact to market rumors.”
“Most of the companies fed up at China’s main stock board are now coming here”,
said Zhu Junfeng, vice chairman of TF Securities Co. Ltd in Shanghai. “It’s the
most market-oriented system in China, with little administrative intervention”,
explained Mr. Zhu to China Daily. Because of its autonomy and liberty to grow up,
the Chinese “Nasdaq” is attracting more companies and investors.