The long list of stock exchanges in the U.S. is slowly being whittled down to a few. With the NASDAQ and NYSE slowly acquiring smaller stock exchanges, the trend seems to be heading towards larger and fewer stock exchanges.
So whats happening in China? Bucking the trend, Shenzhen is starting a new stock exchange for small and medium sized start-ups. The timing seems even stranger when one considers the 21.2% YTD drop the Shanghai Composite Index has undergone and the possible decline in growth the whole world might be heading into.
So what does exactly does this bring to China? As a stock exchange focused on start-ups, it would be encouraging entrepreneurship and creativity, making it a lot easier to get funding. The strange timing might even be a blessing in disguise. The huge potential of start-ups come with a very large downside, much more than the blue-caps at the Shanghai Stock Exchange. Fears of a slowdown in Chinese growth may prevent over-exuberant valuations and help protect investors.
At this point of time, manufacturing still accounts for approximately 50% of China’s GDP. In order to make a step up, China needs to move towards a knowledge-based economy, coming up with the ideas rather than manufacturing the ideas of others. Increasing access and improving the ease of obtaining funds will only expedite this process, advancing China’s growth potential.
Posted by jqwerty 
