(Xinhua)
Updated: 2007-12-20 17:12

The market capitalization of 194 companies listed on the Shenzhen small and medium-sized enterprises (SMEs) board surpassed 883.6 billion yuan ($120 billion) as of December 11, more than four times the level at the end of last year, when only 101 companies were listed.

"The establishment of the SME board in 2004, more than one decade after the main board of the Shenzhen stock exchange, was intended to widen financing channels for small and medium-sized enterprises," said Li Feng, a senior equity strategy analyst with China Galaxy Securities.

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The figures indicate that goal is being achieved.

In 2007 alone, 93 companies were listed on this board, with the debut of Ningbo Bank yielding the largest proceeds of 4.14 billion yuan.

From June 16, 2006 to December 11 this year, 146 companies were listed, a monthly average of eight. This August, during the equity market's bull run, 31 SMEs went public, according to Thursday's China Securities Journal, a newspaper run by Xinhua News Agency.

Li said the accelerating pace of approval of initial public offerings (IPOs) helped ease pressure on the mainland's soaring bourses this year.

The Shenzhen stock exchange, which is still only less than one fourth of the Shanghai bourse in terms of market capitalization, has 666 listed companies.

Shenzhen is due to get a NASDAQ-like growth enterprise board in the first half of 2008. This board is intended to help small start-ups, especially high-growth, high-tech firms, to raise funds. Listing thresholds will be lower than the main board.

The Shenzhen exchange represents the efforts by China to build a multi-tier capital market, which has been rated as a top priority by the country's top securities regulator, Shang Fulin.

The country encouraged large and well-performing overseas firms and Hong Kong-listed domestic companies to go public on the Chinese mainland market, according to Shang.

Shang added that China also hoped companies would use the markets to reorganize their assets. For example, state-owned enterprises might list part of their operations to diversity their ownership and fund sources.

The market corrections would continue through the end of this year, Li said, "but most listed companies still have high earnings prospects because of positive operational performance and forecast profit growth."

Li added that strong IPO activity would probably continue next year on China's exchanges.
Analysts believe that the next wave of IPOs will feature tourism, catering and department store operators, given rising earnings expectations for these sectors.

The Shenzhen SME board index gained 1.17 percent Thursday to close at 5,444.16 points.