New bourse in Beijing starts trading

The highly-anticipated Beijing Stock Exchange (BSE) officially started trading at 9:30 a.m. on Nov. 15. The first batch of 81 companies made their debut on the new bourse, including 10 newly-listed companies and 71 companies transferred from the selected layer of China’s National Equities Exchange and Quotations (NEEQ), also known as the New Third Board.

The 81 companies registered a combined trading volume of about 9.58 billion yuan ($1.5 billion) on the first day of trading The share prices of the 10 newly-listed companies surged 199.8 percent on average and those of the rest 71 seeing stable overall performance.

The basic layer and innovation layer of the New Third Board were also boosted by the new bourse in Beijing, with their trading volumes on Monday rising 40.37 percent and 34.07 percent, respectively, from the previous trading day.

Since Chinese President Xi Jinping announced that the country would set up a stock exchange in Beijing at the Global Trade in Services Summit of the 2021 China International Fair for Trade in Services (CIFTIS) on Sept. 2, China’s securities regulator spared no effort to push ahead with the implementation of reforms and completed the release of relevant systems, the opening of investor accounts, and the preparation of technology system and enterprises within about two months, eventually ensuring the smooth opening of the new bourse.

Of the first batch of enterprises, 87 percent are from advanced manufacturing, modern service, high-tech service, and strategic emerging industries, and 17 are “little giant enterprises” with specialized, sophisticated techniques and unique, novel products. All of them enjoy sound business operations and relatively strong growth prospects.

These companies cover 25 major industries of the national economy, and most are in the vanguard of industry segments. Their average research and development (R&D) intensity reaches 4.2 percent and R&D expenditure 25.36 million yuan, fully demonstrating the role of the BSE as a platform serving innovation-oriented small and medium-sized enterprises (SMEs).

China is home to more than 40 million business entities, including more than 225,000 high- and new-tech enterprises, said an official with the China Securities Regulatory Commission (CSRC), noting that these companies are in different stages of development and have strong and diverse investment and financing demands.

The new bourse in Beijing will improve from many aspects the capacity of the country’s multi-level capital market for serving SMEs, thus adding fresh impetus to the implementation of innovation-driven development and the building of the new “dual circulation” development paradigm, according to the official.

The BSE can strengthen the basic functions of China’s capital market and support SMEs in realizing innovative development with the help of the capital market, the official noted.

It will better satisfy the needs of innovation-oriented SMEs in capital raising, merger and acquisition, reorganization, transaction valuation, and other aspects representing the basic functions of the capital market and help SMEs achieve better and faster development, the official explained.

The new bourse help create a market system featuring long-term services covering the entire industrial chain, which can better meet the diverse demands of SMEs, the official said.

The primary platform serving innovation-oriented SMEs China aims to build not only refers to the BSE, but also includes at least the entire New Third Board market, with the BSE playing the leading role and the innovation layer and basic layer of the New Third Board being the foundation, he said.

The BSE and the innovation layer and basic layer of the New Third Board, while each performing its functions, dovetail with each other and will form institutional synergy to extend the service chain of the capital market, enabling enterprises to flexibly choose their development paths in accordance with their actual needs, according to the official.

The establishment of the BSE is expected to help generate resource agglomeration effects and optimize the development environment of innovation-oriented SMEs, the official pointed out.

The new bourse will guide various financial intermediaries and investors to actively participate and pool local governments’ strength to promote the aggregation of technologies, innovations, and capital, thus further optimizing the environment for innovation-driven development of SMEs, he added.

The BSE will always focus on serving innovation-oriented SMEs, continue to improve its systems that fit the characteristics of such firms, earnestly implement the pilot registration-based initial public offering system, intensify efforts to improve the quality of the listed firms and try to foster a benign market environment featuring dynamic investment and financing activities, according to an executive of the BSE.

At the same time, the bourse will attach greater importance to enhancing supervision, preventing risk, and promoting stability, strengthen systematic thinking and bottom-line mindset, clarify responsibilities of intermediaries, crack down on violations of relevant laws or regulations, improve pre-listing risk judgment, firmly guard against systematic risks, make solid efforts to protect the legitimate rights and interests of investors, and intensify oversight over the exercise of power to consolidate the bottom line of clean development, the executive said.