The Shenzhen Stock Exchange is in final preparations for the launch of a sub-board for the listing of small- and medium-sized enterprises (SMEs).

With all technical preparations in place, the opening of the SME board is just a matter of time, an exchange spokesman said over the weekend, adding that he does not know the exact timetable.

The exchange just finished the latest round of testing of the systems for new share listing, trading and settlement on Saturday.

Instead of launching an independent second board, as previously planned, the Shenzhen exchange will put small and medium caps, or those with less than 50 million tradable shares, in the SME sub-board under the main board and will apply the existing listing rules and threshold, insiders said.

But the counter is expected to have its own index and trading and information disclosure systems.

However, the arrangement will only be transitional and will pave the way for the establishment of a truly independent second board in the long run, analysts said.

The opening of the new SME board is expected to infuse fresh energy into the southern stock exchange, which has practically suspended new listings since the end of 2000 for the preparation of the second board market, which was later shelved due to risk concerns.

It is also a good thing for investment bankers, many of whom have undertaken SME initial public offering (IPO) projects but have been troubled by the traffic jam on the road to being listed.

The market also responded positively to the news of a likely resumption of IPOs in Shenzhen in the near term, with some small and medium caps and the Shenzhen indices rallying over the past few trading sessions.

"The days until the SME board launch in Shenzhen can be counted," said Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, the nation's highest legislature, at a forum in Shenzhen over the weekend.

It will further enrich the capital market structure, he said.

With the growth of the SME board and equity exchanges in China, foreign venture capital investors will also have more investment opportunities in China, he said.

(China Daily April 5, 2004)