Shares of Chinese brokerage companies ballooned amid the reports on the creation of a new stock exchange in Beijing. At the same time, investors are particularly worried that competition for listing will be inevitable. Since Chinese companies are forbidden from going public on Wall Street, Beijing has offered market participants an alternative - a new stock exchange in Beijing. China plans to establish the exchange floor as part of the new Third Board reform, in a bid to foster small business development and boost the country’s equity financing. President Xi officially unveiled the project to the public.
According to China’s regulator, the Beijing Stock Exchange would only complement the exchanges in Shanghai and Shenzhen. Nevertheless, experts fear growing competition. "The Beijing stock exchange is on a par with the Shanghai and Shenzhen stock exchanges. If it thrives, the three will share the market in a tripartite showdown," Rock Jin, the economist and CEO of investment adviser PopEton, wrote. Although it was good news for the economy, it boded ill for the market in the short term because "after all, it diverts capital away from Shanghai and Shenzhen markets."
