Strenthening economic resilience during the Covid-19 outbreak

By: Shanghai Stock Exchange, May 2020

Covid-19 has swept almost every corner of the world, creating a health emergency and disrupting global capital markets. Yet financial markets stabilised after short-term volatilities, again proving the pivotal role of exchanges in maintaining the orderly operation and strengthening resilience of the economy.

During the outbreak of Covid-19, the Shanghai Stock Exchange (SSE) has implemented a number of precautions to ensure market stability and business continuity. Internally, the SSE has established a comprehensive contingency response mechanism, and made additional preparations for business, personnel and technical arrangements.

The safety and well-being of our staff and our stakeholders is our top priority. We have experienced working from home, rotating work shifts and we are now all back in the office. To date, none of our 1,900 employees has become infected.

Uninterrupted IPOs 

The Exchange has been doing its utmost to maintain smooth direct financing channels to support the real economy during the pandemic. To better accommodate the issuers’ fund-raising plans, the SSE has adapted and optimized its services in offering, underwriting and listing. The schedules for the pre-offering companies and companies that are in the offering process were adjusted to guarantee smooth offering and underwriting when the market resumed trading after the extended market closure for the Chinese new year holidays in early February.

Remote offering and listing services have been introduced to serve hundreds of companies including online coaching, roadshows and listing ceremonies, in an effort to carry out social distancing.

Between February 3, the day the market resumed trading, to May 8, the SSE had 37 IPOs, with 15 on the main board and 22 on the SSE STAR Market, raising a total of USD6 billion (RMB42.5 billion).

Epidemic-stricken areas

Companies in the epidemic-stricken areas such as Hubei province have had difficulties in their business activities and in liquidity management.

Apart from ensuring uninterrupted IPO business, the SSE also provided efficient and convenient financing services to support these companies in the areas severely hit by the coronavirus.

When we learnt that an enterprise undertaking the construction projects of the mobile cabin hospitals and of Huoshenshan Hospital targeted to treat patients infected with Covid-19 had financing needs, we speedily helped it complete a USD33 million (RMB230 million) ABS issuance.

The first online IPO ceremony we held was for BESTORE, a snack brand headquartered in Wuhan, the epicenter of the epidemic.

In order to support and encourage enterprises directly linked with epidemic prevention to go public, we have streamlined our review procedures. For instance, it took only 39 days for one company aiming for the SSE STAR Market to complete the SSE’s review process.

To safeguard the supply of epidemic prevention materials and logistics, we have also launched “epidemic prevention and control bonds”. By the end of April, 89 issues of these special bonds had been offered, for a total of about USD12.8 billion (RMB90.51 billion).

100th STAR debut 

Despite challenges for the global listing business during the pandemic, the SSE STAR Market, where China’s pilot registration system for IPO was implemented, welcomed 22 new companies to its family in the past 3 months.

On April 29, the 100th SSE STAR Market company made its debut, taking the STAR Market’s total market cap beyond USD180 billion (RMB1.3 trillion).

Among the 100 companies, those in the new-generation information technology and the bio-pharmaceutical sectors account for more than 60%.

During this time of need, they have actively assisted in the epidemic prevention and control, and provided a large number of products, technologies and services, including nucleic acid detection kits provided by pharmaceutical companies, epidemic screening and monitoring services provided by AI companies, and technical support for remote work provided by IT companies.

Thanks to the STAR Market’s high concentration on innovation sectors and the inclusive listing criteria, companies with cutting-edge technologies are able to go public and get financing. Since the onset of the outbreak, they have vigorously fulfilled their social responsibilities and bravely shouldered their responsibilities.

The normal operation of enterprises is the key to stable employment and economic development. The downward pressure of the global economy has brought greater uncertainty to the production, operation and future development of enterprises.

Exchanges encompass almost all sectors and gather various enterprises at different stages and scales of development. The fundamental function of connecting investment and financing has remained the most direct and effective way to support the real economy.

Raising resilience means resilient capital raising and overcoming the challenges brought by the coronavirus with resilience. At the Shanghai Stock Exchange, we will continue to ensure convenient investment and financing channels while building a well-regulated, transparent, vibrant, and resilient capital market.