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Unicorns Have a Lot of Questions About Shanghai’s New Nasdaq Rival

In early November, Chinese President Xi Jinping unveiled plans that would allow companies around the world access to Chinese investors.

Specifically, the plan created a new equity bourse in Shanghai, giving tech companies both domestic and abroad better odds of an initial public offering in China. The move that likely came as a relief for the Shanghai Stock Exchange, which has longed to play on the global stage as other boards such as the U.S. Nasdaq. But the question remains: How many companies will want to play ball?

It’s hard to say for certain with so few details about the new tech board, dubbed the science and technology innovation board.

“For example, what is liquidity, refinancing, and how (are IPOs) going to be priced?” said Brian Gu, vice chairman and president of electric vehicle maker, XPENG Motors during a panel at the Fortune Global Tech Forum in Guangzhou on Friday. “Whether China has a system to value us properly, all of those things need to be clarified.”

In recent years, Chinese startups have sought to list abroad in part for a more mature pool of investors. That will be a hard point to ignore for firms weighing a listing on the platform compared to a established global exchange in Hong Kong or the U.S.

“One thing we like to consider is what kind of investor do we need? We can’t say much about the tech board right now since there’s not a lot of information. But if you look at (Chinese A shares in general), the average turnover is three to four times higher than in Hong Kong,” said Esther Wong, managing director of facial recognition unicorn SenseTime. “The amount of long-term investors in the domestic market at its current stage still has room for improvement.”

Despite these concerns, the new board, has already received interest. As Shanghai Securities News reports, Shanghai Shangfei Plane Equipment Manufacturing Co. has filed an application.

Smaller, potentially less financial stable firms, are also expected to benefit from the opening of the new bourse.

The Shanghai Stock Exchange currently lists new companies only after vetting by regulators. In a departure from the status quo, the board is testing a registration-based IPO formula not unlike ones found in U.S. markets—making it easier for firms to list.

These smaller companies could receive a home field advantage, reaching investors that recognize their brand names and logos, says Gu.

Even more promisingly for potential offerers, the bourse was announced by the Chinese President himself in a sign that the launch is a political priority.

But with so little to go on, startups appear to be waiting for a signal.

“I say we will have to wait for new information to come out to see what it all means,” Gu said.