These firms will also be given priority when selling bonds with maturities of five and 10 years to fund operations, and the local government will study the creation of a guidance fund to invest in early-stage start-ups, it said. The measures will be effective starting February 1.
“Equity investments are playing a critical role of promoting the formation of innovative capital, raising the proportion of direct financing and supporting technology innovation,” the Shanghai government said in the document. “[These steps] will attract more investment firms to start and develop businesses in Shanghai. That is where Shanghai will focus to implement the state’s drive of promoting the intertwined development of Shanghai as both financial and tech innovation centres.”
Shanghai, which has a population of 25 million people and the largest stock exchange in Asia, has not been immune to a nationwide economic slowdown in China triggered by property market woes and an exodus of foreign investment.
In 2022, Shanghai had to implement stringent Covid-19 containment policies that led to a crippling two-month citywide lockdown, which shut down even the city’s landmark Disney theme park and US electric-vehicle giant Tesla’s gigafactory.
To get the local economy back on its feet, the city’s government has been rolling out stimulus measures, such as subsidising merchants and consumers and asking state-owned property owners to waive part of rents paid by businesses hit by the lockdown.
To promote equity investment and technological innovation, the city will also encourage professionals to create an industry association for angel investments that will offer a service platform to help peer angel investors carry out joint due diligence, valuation assessments and investments, according to the document. Angel investments refers to investments in companies in early stages through stocks or convertible bonds.
Shanghai will also set up a database to track and assess angel investors and their management teams, which will be used as a reference in investments by government-led funds and in applications for policy support, the document said.
The city will also tap the country’s 27 trillion yuan (US$3.8 trillion) wealth-management products market by encouraging commercial banks to set up such units in the city, to invest in unlisted companies and equity investment funds in the Lingang free-trade zone and the Yangtze River Delta region, according to the document.
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