Beijing Stock Exchange puts focus on China’s SMEs

The Beijing Stock Exchange (BSE) is to launch a ‘BSE 50 index’, which experts say will further stimulate the development of the country’s small and medium-sized enterprises, according to some of the country’s leading finance specialists.

The bourse has announced that “a broad-based index comprising 50 large companies will be introduced, which will be its first benchmark index”. Zhou Guihua, the bourse’s chairman, also said that more efforts should be made to encourage more and better reward the exchange’s investors.

“The index will provide a gauge to better measure profits in the secondary market,” said Zhou Yunnan, founder of private fund manager Beijing Nanshan Jingshi Investment told the China Daily website. “More index-based products will be developed, attracting incremental capital to the exchange and elevating the exchange’s liquidity and trading activity.”

A total of 110 companies have been listed on the exchange since the establishment of this new bourse at the China International Fair for Trade in Services in September 2021. These companies have raised over 23.5 billion yuan ($3.4 billion) through their initial public offerings at the BSE.

Development of strategic emerging industries has been a highlight of the year-old exchange, China Daily reported. More than 80% of BSE-listed companies are from the industrial materials, information technology and healthcare industries. In addition, 23 companies have been recognized by the Ministry of Industry and Information Technology “for their special roles in a niche sector, high market share and innovative capacity”.

Experts praised the streamlining of trading mechanisms at the exchange, saying it had made it more inclusive, said Li Zhan, an economist at China Merchants Fund. “SME’s financing demand, which is more flexible and diversified, usually requiring smaller amounts but faster approval, has been well addressed at the BSE, which advanced technology innovation and China’s industrial upgrading,” he said.

Chen Li, chief economist at Chuancai Securities, said that the BSE has been increasingly better connected with the three-year-old STAR Market at the Shanghai exchange, which nurtures ‘hard tech’ companies. That connection will “help build a multi-layered capital market in China and serve the wider economy with substantial technology advancement”, he said.

Since STAR Market officially started trading in July 2019, it has attracted 162 new-age information technology companies, 93 biopharmaceutical companies, 76 high-end equipment manufacturers and another 56 new material makers. They make up nearly 90% of all the 437 companies listed at the STAR Market.

 

SMEs stabilise in January-July period

China’s small and medium-sized enterprises grew their collective revenues in the first seven months of the year, official figures show.

The combined operating revenue of the country’s industrial SMEs rose 8.1% year-on-year in the January-July period, data from the Ministry of Industry and Information Technology showed. Profits of these firms during the period grew by 1.6% from a year earlier.

“Preferential policies have been rolled out to ease the financial burden of smaller businesses and further boost their vitality”, the ministry said.

In the first half of 2022, China’s micro, small and medium-sized enterprises received nearly 1.8 trillion yuan ($261.62 billion) in tax cuts, fee cuts and deferrals, as well as tax refunds, official data showed.

The ministry has published the list of the fourth batch of ‘little giant’ companies, which names more than 4,300 companies that represent the elite of China’s SMEs that “specialize in a niche market, boast cutting-edge technologies and show great potential”.

“Despite the impact of Covid-19, the average annual operating revenue growth of these companies logged a rapid increase of over 20% in the past two years,” according to Liang Zhifeng, an official from the ministry.

Liang said the ministry will take further measures to increase funding, encourage talent and develop technologies to create a better environment for the growth of these ‘little giant’ firms.