Return of 'unicorns' to bolster China's new economy: Expert

BEIJING - The return of overseas-listed Chinese "unicorn" companies to the A-share market will facilitate the rise of the new economy, an expert said.

ICBC International economist Cheng Shi said in an article that such tech firms, valued at more than $1 billion, will attract more private capital into innovative startups and break the domination of the traditional sector in the country's capital market.

The China Securities Regulatory Commission Friday announced a pilot program to help leading tech firms having gone public abroad re-issue shares in the mainland market via depositary receipts. Tech giants, such as US-listed Alibaba and Baidu, will be able to reach domestic investors.

Businesses in high-tech and emerging sectors including big data, cloud computing, artificial intelligence, chipmaking, and biomedicine will be the first group to come back to the mainland market, Cheng said.

For years, the capital market was dominated by property developers, banks and other traditional companies, with innovative firms blocked by legal and technical barriers, such as profitability requirements. Many tech firms turned to markets in Hong Kong and New York.

As regulators started to loosen rules for the new economy, overseas-listed firms have become optimistic about a return.

Qihoo 360, China's largest internet security company returned from the New York Stock Exchange in February and witnessed its market value peak at more than 440 billion yuan ($70 billion), nearly seven times the value when it delisted from the US market.

Cheng believes a positive cycle will take shape among unicorn companies, the capital market, and the new economy, which will contribute to a more sustainable economy.

"While unicorns can achieve faster growth due to abundant capital support, the new economy will also be able to grow and serve as a powerful engine for China's high-quality development," Cheng said, predicting more unicorns to emerge in the country.

China is home to 36 percent of the world's unicorn companies amid its transformation from a follower into a potential leader in technological innovation. Data shows Alibaba's Ant Financial and Didi Chuxing are among the top unicorn companies.