The Shenzhen Stock Exchange will test its technical system on Saturday that would allow public investors to bid for new shares, in a move seen as resuming initial public offerings for the first time in three years.

The system will permit investors who hold existing shares worth 10,000yuan (US$1,205)to subscribe to a 1,000-sharelot of IPO stocks, said the exchange in a statement. China Registration and Settlement Co Ltd, the sole domestic stock clearing and settlement company, and the brokerage houses which are members of the Shenzhen bourse will also join in testing the system.

It is a technical preparation and the resumption of new share sales is highly likely on the Shenzhen stock market soon, said Liu Xiaohong, an analyst with Guolian Fund Management Co Ltd.

That will help to boost trading on the Shenzhen market by attracting more liquidity into newly listed companies.

Officials of the stock exchange have been lobbying the securities regulator to allow the resumption of IPOs, which were stopped in October 2000,to catch up with the Shanghai Stock Exchange in the number of listed companies and liquidity.

The Shenzhen Stock Exchange declined to comment on whether the resumption of IPOs would follow the system test.

That does not mean anything and it is just a technical test, said an official from the exchange, who spoke on condition of anonymity, in a telephone interview.

The Shenzhen bourse, one of the two stock exchanges on the Chinese mainland that started more than a decade ago, has not listed a single new company in the past three years as the securities regulator had aimed to build it into a market similar to NASDAQ to house China's mushrooming technology-heavy start-ups.

All new listings, meanwhile, were shifted to the Shanghai stock market.

But the plan was aborted amid the global bubble burst in technology stocks.

The Shenzhen Stock Exchange will accept mainly technology-dominant companies after the resumption of IPOs, and then devote a special section to high-tech firms before a second-board market is eventually set up, according to media reports.

China's State Council, or the cabinet, said in a circular on February 2that it will adopt a go-slow approach to building up the growth enterprise market to widen the sources of capital to high-tech firms.

The IPO drought has taken its toll on the Shenzhen market, which trails its Shanghai counterpart in the number of listed firms and tax revenues.

At present, the Shenzhen Stock Exchange lists 549 companies while the Shanghai Stock Exchange has 783firms.

(Shanghai Daily February 12, 2004)