China has launched a new stock market for homegrown technology companies called as Science and Technology Innovation Board or STAR Market.The market is modelled after a NASDAQ system.
According to the regulations,red-chip companies which means Chinese based firms incorporated and listed outside China are allowed to be listed on the STAR market.
The STAR Market is different as it has more lenient standards for profitability and price volatility than the main exchanges.It permits companies to list before they have earned a profit.Investors are allowed to short-sell individual stocks for the first time in mainland China.
The STAR Market is seen as a move to keep Chinese tech firms from listing in stock markets abroad.The country has been home to high-profile companies like Alibaba, Tencent, Xiaomi, and JD.com.
But due to stringent profitability requirements at home,they have chosen to list in New York City or Hong Kong.By providing a low barrier for entry, the development seeks to incentivize Chinese technology companies to list on home stock markets.
The Nasdaq is an American stock exchange.It is the second-largest stock exchange in the world by market capitalization behind only the New York Stock Exchange.