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Shenzhen plans to challenge Shanghai's dominance in China blue-chip listings

SHANGHAI, Dec 31 (Reuters) - The Shenzhen Stock Exchange, home to China’s smaller listed companies, said it aims to resume initial public offerings by blue-chip firms in 2016 after a 12-year gap, potentially heating up competition with its bigger rival in Shanghai.

Under the current arrangements by the Chinese government, the Shanghai Stock Exchange is the bourse for blue-chips, while the Shenzhen exchange is positioned as the marketplace for mainly smaller firms and start-ups, having halted large-cap listings since 2004 to avoid direct competition with Shanghai.

But as Beijing accelerates its capital market reforms to give companies easier access to funding, the demarcation lines are being blurred.

Last week, China’s State Council, or cabinet, said China plans to launch a strategic industries board on the Shanghai Stock Exchange, which would potentially compete with Shenzhen for smaller listing candidates.

The Shenzhen exchange said in a statement on Thursday that it plans to “resume IPOs on the main board, in a bid to aid restructuring in state-owned enterprises, and cultivate more blue-chip firms”.

It was not clear whether such a plan has been submitted to the central government, or whether approval has been obtained. The Shenzhen Exchange could not be immediately contacted for comment.

The bourse, which hosts a board for small- and medium-sized enterprises and Nasdaq-style start-up board ChiNext , said it also plans to lower the listing threshold, so that loss-making firms and overseas-listed Chinese firms can float there.

The exchange also said it will seek to launch the Shenzhen-Hong Kong Stock Connect “as soon as possible”. Rival Shanghai Stock Exchange launched a similar cross-border equities investment scheme, the Shanghai-Hong Kong Stock Connect, more than a year ago.

The Shenzhen exchange also plans to launch options products based on certain indexes, and is studying the launch of cross-broader fixed-income products, it said. (Reporting by Samuel Shen and Nathaniel Taplin; Editing by Muralikumar Anantharaman)

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