CHINA’S new Nasdaq-style tech board could become a hotbed for companies to spin off and list units domestically, something that hasn’t been much of an option until now.

At least nine companies listed on Hong Kong and mainland stock exchanges have decided to or are considering spinning off parts of their businesses on the freshly launched SSE STAR Market in Shanghai.

One of them, Western Metal Materials Co., surged by the 10 percent limit for two days in a row after disclosing its plans in early April. Lepu Medical Technology Beijing Co. climbed 13 percent over a similar time frame.

The Shanghai and Shenzhen stock exchanges have been inundated with investor queries about spinoffs on the new board, where the first listing is expected in the next two months. The bourse is in part aimed at stemming an exodus of listings by innovative Chinese firms. Suzhou HYC Technology Co. is the first to start an initial public offering on the new tech board.

Investors and companies were encouraged by the China Securities Regulatory Commission (CSRC) saying earlier this year that companies of a certain scale would be able to list qualified subsidiaries separately on the tech board, though it didn’t elaborate. The CSRC has historically been reluctant to approve spinoffs at home.

“The regulators didn’t encourage domestic spinoff listings in the past, as there were concerns it might spur speculation or problems such as financial misbehavior or corporate independence issues,” said Ge Shoujing, a Beijing-based senior analyst at the Reality Institute of Advanced Finance.

“With the launch of the tech board, which introduces a registration-based IPO system, the regulatory mindset has changed to loosen control and allow the market to decide which companies should be listed.”

Domestic spinoffs appeal as they’d give investors on the mainland fresh buying opportunities, while parent companies can potentially streamline operations and have seen boosts — at least in the short term — to their share prices. The nine companies that announced spinoff plans all rose in subsequent days.

“Spinoff listing on the tech board is definitely an attractive investment theme for the stock market, given these subsidiaries are expected to enjoy higher valuations and better branding thanks to the huge attention on the tech board right now,” said Fu Lichun, an analyst at Northeast Securities Co. (SD-Agencies)