MNI: China Eyes More Tech IPOs, State Funds To Curb Volatility

China will push more high-tech listings and fast-track on-exchange mergers and restructurings in 2026 to lift the quality of listed companies, while keeping new main-board IPO numbers steady, with state capital continuing to trade ETFs to temper market swings, policy advisors told MNI.

Dong Shaopeng, senior researcher at Renmin University’s Chongyang Institute for Financial Studies and a Chinese stock-market policy expert, said authorities will further tilt listing approvals toward high-tech firms to support technological innovation, citing the Shanghai Stock Exchange’s recent rule refinements for aerospace companies.

Global tech investing over the next three years may increasingly shift from the U.S. to Asia, as Asian tech companies move from early-stage R&D to maturity and earnings delivery – a development expected to strongly support Chinese stock performance. Dong noted that valuations remain relatively low, with the Shanghai Composite Index trading at just 17.73 times earnings, compared with 31 times for the Nasdaq. (See MNI: HKD To Hold Firm On Mainland Equity Flows)

However, Dong expects the number of new IPOs on the Shanghai and Shenzhen exchanges to remain flat at around 100 this year to avoid a supply glut that could destabilise the market. Raising the quality of listed companies – through controlling IPO pace, accelerating on-exchange M&A, and improving long-term returns – will be a central focus over the next five years, he added.

Dong said the main reason China’s market has struggled to sustain a bull run is a severe supply-demand imbalance, with a rapid increase in listings from 2021 to 2023 outpacing the inflow of new capital, meanwhile, low-quality IPOs have undermined investor confidence in the new-issue market.

Zhao Xijun, co-dean of the Research Institute of Capital Markets at Renmin University, agreed that policy will increasingly channel resources into technology and innovation, including more IPOs for tech and other priority sectors. (See MNI INTERVIEW: PBOC To Boost Tech Loans Via Structural Tools)

Policymakers remain supportive of traditional industries pursuing tech upgrades, but gains are expected primarily through M&A that boosts asset quality rather than new IPOs, since most key firms are already listed, he said.

Capital markets are now expected to serve a third macro function alongside financing and investment – shaping economic expectations and bolstering household wealth, Zhao added.

EQUITY STABILISATION

Dong noted that state capital, led by Central Huijin Investments, will remain a key stabilising force in the market, using ETF trading as a tool to support stability, in line with the China Securities Regulatory Commission’s 2026 objectives to sustain positive market trends, implement timely counter-cyclical measures, and curb sharp volatility.

In extreme scenarios, state holdings could reach 50-60% of the equity ETF market, although 30% is already high under normal conditions, he added.  

Data from Chinese financial analytics provider Wind show that by the end of December 2025, China’s equity ETFs totalled roughly CNY3.85 trillion, of which state capital held about CNY2.0-2.2 trillion, or 52-57%, making it the largest shareholder and a quasi-stabilisation fund.

With current investor enthusiasm high – particularly in the tech sector – the market should be allowed a greater role, reducing the need for intervention, Dong argued. 

PBOC TOOLS

Zhao said the People’s Bank of China’s 2025 tools, introduced with an CNY800 billion quota to provide liquidity to non-bank institutions and support listed-company share repurchases, are intended to correct market distortions, with the possibility of additional instruments being deployed if necessary.

Dong suggested expanding these facilities and replenishing the capital of non-banking institutions – such as brokers, insurers, and asset managers – could be a trend, calling for the PBOC to inject up to CNY1 trillion for replenishment and liquidity supply. 

Zhao added that, in line with China’s goal of building a strong financial system, it is essential to cultivate top-tier investment institutions, including investment banks and mutual funds. Beyond enlarging existing equity ETFs, further rule reforms are needed to reduce restrictions and allow more orderly fund inflows into the market.