China’s new national over-the-counter stock exchange, or so-called third board, has surged since its launch early this year as local investors rush to invest in technology start-ups, consumables companies and other sectors that are unavailable or under-represented on the country’s main exchanges, according to the Financial Times.
The National Equities Exchange and Quotations (NEEQ) market, which was inaugurated on January 17, has attracted strong interest from local fund managers and others, with a new index launched to track the market up 53 percent this year, according to the FT.
‘Companies on the new third board represent the direction of China’s economic transformation,’ Fu Bairui, who manages a fund dedicated to the NEEQ, tells the FT in an interview. ‘Two years ago China’s State Council identified seven big, strategic emerging industries. The new third board is a chance to invest in these trends.’
Various mutual fund products have been launched to allow retail investors to invest in the NEEQ in recent weeks, supplementing the hedge fund-style investors that have dominated inflows to the board since its launch, the FT reports. Around 60 fund products have launched so far this year to invest in the board, bringing the total number invested in the NEEQ to 80.
Tech companies account for about 30 percent of the stocks listed on the board, unlike the country’s main exchanges, which have few tech companies and are heavily weighted toward manufacturers. Another 18 percent of the NEEQ is composed of tourism, media and healthcare firms, the FT says.
Companies have raised more than $2 bn on the NEEQ, which offers a much simpler fund-raising alternative to the far more bureaucratic traditional exchanges, the newspaper adds.
