On 18th september 2015, the first China (Shanghai) New OTC Market Traders Conference was successfully held by the Yangtze River International Chamber of Commerce and the Asia Pacific Finance Council. The guests came to the conclusion that New OTC should be a priority for the top-level design of Chinese capital market, a more aggressive attempt to market-based economy and the key impetus for the transformation from manufacturing country to powerful innovative country. Nowadays, for the entrepreneur and investor, they would lose a precious opportunity if they did not have a good knowledge of New OTC.

A discussion forum on the subject of the current situation of New OTC Market and the solution of resolving liquidity predicament

The YRIC and the Asia Pacific Finance Council jointly sponsored the first China (Shanghai) New OTC Market Traders Conference. One of the key issues of this conference is to analyse difficulties that new OTC was facing at present. In an era of masses' innovation and Pioneering, the number of industrial and commercial registration in the first half of this year has reached more than 12 million, there were 3482 New OTC listed enterprise. Money raised in the first half of the year reached 63 billion. The data could show us the New OTC had an important influence on China’s economy. Difficulties that new OTC was facing at present are the price of growth. It has been more than 20 years since the beginning of National Association of Securities Deal Automated Quotations, but the enlargement of New OTC only cost one year. To face the problem, definite positioning and adherence to the faith, towards a market-oriented economy system, rely on the strong system support, the New OTC will exert its historic power.

New OTC means a more aggressive attempt to market-based economy

Wang Gongquan, famous investor, was giving the keynote speech

The veteran investors Mr. Wang Gongquan said, the New OTC Market has become one of the hottest topics in China nowadays. It is so popular that if one does not pay any close attention to or know anything about the New OTC Market, they are even too ashamed to make investment and establish a company. The reason is that there are various plights existing in the financing and growing of  medium small and micro-sized enterprises of our country. Many medium small and micro-sized enterprises hope to raise fund in the capital market, so as to stimulate their development. And the New OTC Market can offer such kind of opportunity, which help the medium small and micro-sized enterprises have new ways to link with the capital market. That is to say the reason for the popularity of the New OTC Market is its profound social and historical background.

Mr. Wang Gongquan hopes that the effect and trend that the development of the New OTC Market will bring to Chinese economy can be benign and healthy. He hopes that it should bring more good things instead of negative elements. He also wishes that the New OTC Market can obtain professional care from all parties and be self-regulated. That asks for the participants to establish order in the process of their involvement, and help the New OTC Market grow healthily. He thinks that the New OTC Market is a more positive attempt which China takes to further its market-oriented economy. Just as the early Shenzhen Special Economic Zone, the New OTC Market will bring big innovations, competitions and vitality to the middle and small-sized enterprises. At present, the growth of every aspect in our country slows down, and some industries even decline. The New OTC Market plays a role to promote the new economy to further develop. We cannot say that it is the mainstay, but at least a stimulus. In addition, he also stressed that when there are defects existing in the A-board, as a new field and a new platform, the New OTC Market, provides everyone with the opportunity to draw lessons from the past and start a new journey.

The New OTC Market is an important driver of resolving the crisis of China

Chairman of Zendai Group Mr. Dai Zhikang

Mr. Dai Zhikang said, “the New OTC Market is an important driver of resolving the crisis of China, and there will be no future without investment. Investment needs capital market. Main board market is bear market, which cannot shoulder the main responsibility. We should depend on the New OTC Market, in which there are more than 3000 companies now. I wish the number will be doubled by this time next year. And in the year after next, I wish the number can reach 10000. If there are 10000 public companies, and even if 20% or 30% of them are good companies, the growth point in China’s economy will be spurred. A potentially large capital market is the prerequisite for activating pioneering entrepreneurship among citizens all over the country. Despite the fact that the New OTC Market is still in its infancy, there is very good sign that shed lights on a promising future.”

Mr. Dai Zhikang stressed “we shouldn’t look down upon today’s New OTC Market. Although the companies are small and not eye-catching, the New OTC Market is actually not the concubine. The companies of the New OTC Market have a great potential for development.” He wishes the participants of the New OTC Market and he can work together to participate the pioneering business of the whole country and the whole nation, so that they will not be dumped in the future.

The system of the New OTC Market is similar to the imperial examination system in Sui and Tang dynasties of China

Partner of Dingfeng Asset Mr. Wang Shaoyan

Mr. Wang Shaoyan expressed that they had said the New OTC Market would gain the new world. They were the first investment organization to declare this concept. But when referring to the downturn and new liquidity problems of the New OTC Market, he thought that the trend of the New OTC Market still existed, because the dividend of institutional policy can be expected. He made an analogy with New OTC Market system and imperial examination system in Sui and Tang dynasties of China. It is just like the intellectuals of the middle class can finally have the opportunity to participate in the governance of the country. The New OTC Market actually provides a quantity of medium small and micro-sized enterprises with financing and development opportunities which could not be obtained from the previous capital market

When the New OTC Market gets where it is today, the mobility situation is like this is because the construction of institutional does not catch up with it. In addition, the creation, the pseudo creation and the pseudo growth will be validated in front of the mobility; at the meantime, the delisting institution of the New OTC Market is not perfect and complete yet. He said the New OTC Market is a market with threshold which is different from that of the Main-board Market and the Second-board Market, as well as the threshold under the audit system. The threshold of the New OTC Market is internal and has bright spots. The specific performance is that, firstly there is creation and order innovation, and secondly, there is independent and conscious norm. If the enterprises listed on the New OTC Market want to get by, the future capital market will make them pay the price.

When he shared his experience of the investment in the New OTC Market, he explained that the investment in the New OTC Market and that in the traditional PE and VC differ widely. It is hard for us to define it as VC or PE, so we can only call it New OTC Market investment. It should have its own feature and logic. This process is the logic with which all of our entrepreneurs and investors work together to build such New OTC Market investment. Such process is still being verified and built, and this process has strong innovation. He thinks that a group of tigers will emerge in the New OTC Market in the future. Half of the innovation all over the world should come from the New OTC Market.

New OTC Market unfolds the future of China

Mr. Jiang Shuyun, General Manger of Shenwan Securities OTC Market

Ms. Jiang predicted that there will be more and more rising enterprises like Jack Ma’s Alibaba, thanks to the burgeoning of the New OTC Market. Originated in 2006, it now hosts trading of 3,482 companies. The year end is estimated to witness 1000+ companies focused on market-making and 4000 ones officially listed. Needless to say, the New OTC Market will indeed be the future of China. She believed that it will render more and more businesses thrive in a regulated market with capitals pouring in. Shenwan Securities aims to help improve and develop medium-sized and small enterprises. As to the low market mobility, this implicates, to a certain extent, an optimal opportunity for investors. The perfect timing to buy in is when trade-off volumes remain thin. Now that companies are piling into the New OTC at an estimated number up to 10,000 by 2017, growth with an abundance of liquidity will eventually come to reality.  

Have patience and expect a liquid market sure to come

Industrial Securities Chief Market Maker, Mr. Tang Wentao

Mr. Tang Wentao noted that with more space for further development in the New OTC Market, speeding-up market-making is a major feature, thus pushing up listed volumes and vitalize the Market in return. The Market is in a real frenzy, he mentioned, as prices of many market making enterprises are driven up and money came in easy. So there is a wide-spread misconception that it is a gold market and every single listed company is a good one. Whereas the fact is that some will weather through high wind and stand up to the tests in time of crisis while others may not. That being said, the market still offers the main chance of gold hunting, because there are quite a few blue-chip companies in it. They can well be likened to gold ores that only experienced, highly skilled miners can make into exquisitely cut and polished golds. At a background with the current Chinese market in its economic downturn, medium-sized and small enterprises are seeking new way out for survival and development. And only the medium-sized and small ones can put the country’s economy back on track by revitalizing an ever stronger growth engine. That is why the chance comes solely within and from the New OTC. Given all that, an increasing number of companies will rush into the New OTC Market. It is now in such a moderately dynamic state that a lowering liquidity is nowhere to be seen, though activities of capital raising might be affected. Quite the other way around, we believe in the mega trend that more and more small enterprises will go public. The future will be one in which equity investment will play dominant. Only those who can survive the capital market will be able to grow, to build up competency in the niche business, to strike first to gain the initiative.

The New OTC Market is now facing a liquidity risk and might continue to decline. But Mr. Tang holds the thought that once the Market releases its energy and there will be room for prices to rise even further.