three of four debuts soar in financial market created to extend financial lifeline to small businesses

The Beijing Stock Exchange began trading on Monday, with three-quarters of the carefully selected 81 stocks opening higher in their debut, supporting the Chinese president’s decision commit to supporting small and medium-sized businesses which he nicknamed the “little giants” of the world’s second-largest economy.

Sixty of the shares rose 0.2 percent to nearly 500 percent at the start of trading, before the rally faded when the market closed. Shares of Henan Tongxi Transmission, a maker of driveshafts and other vehicle parts, jumped 494% as the best performance, while Tonghuijiashi (Beijing) Information Technology was the worst with a loss of 16% .

As of Monday’s close, 19 companies closed higher, 59 lower while three were shut down.

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Seventy-one of the newbies transferred from an over-the-counter market in the Chinese capital known as the National Equities Exchange & Quotations, or NEEQ, which had struggled to attract investors since its inception in 2012 due to the lack of liquidity. Ten shares were traded for the first time.

Still, the revamped Beijing Stock Exchange – which went into operation two months after President Xi Jinping ordered its creation – is an attempt to put back a financial lifeline to help the private sector and innovative companies raise capital.

This creation marks a new stage in the expansion of the $ 12.4 trillion Chinese stock market, already the largest in the world after the US market. It is in addition to the Shanghai and Shenzhen stock exchanges, which were established in 1990 to test China’s economic reforms.

Beijing’s rise came at the expense of the Shanghai and Shenzhen stock exchanges. Two benchmark gauges that track small-cap stocks on the Star Market and the ChiNext board fell more than 0.5% amid concerns over an overabundance of these small companies.

“Small companies are no longer scarce, so their valuations should be reset,” said Wei Wei, analyst at Ping An Securities. “Investing in companies on the Beijing Stock Exchange must be a selective basis for attracting those with great growth potential and competitive advantages. “

China appeals to academic Xu Ming, known as a market reformer, as the first chairman of the Beijing Stock Exchange Photo: Weibo

The Beijing Stock Exchange had a forerunner in a short-lived marketplace established in 1918 for trading in government bonds, which declined with the relocation of the Kuomintang-controlled government to Nanjing nine years later, shutting down completely. with the outbreak of World War II. .

At a ceremony marking the birth of the new stock exchange, chairman of the China Securities Regulatory Commission, Yi Huiman, said the new stock exchange has an important role to play in promoting innovation and innovation. small business transformation.

The scholarship will be mainly suitable for small businesses engaged in cutting-edge manufacturing and service industries, complementing the Shanghai Nasdaq-style star market and the ChiNext start-up board of the Shenzhen Stock Exchange. Financial support for the bulk of China’s small businesses is seen as critical to its economy, which has struggled with a slowdown over the past two quarters amid rising inflation and blackouts.

The logo of the Beijing <a class=Stock Exchange in China can be seen on a stock chart in this illustrative photo taken on November 12, 2021. Photo: Reuters” data-src=”–/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTY0MA–/–~B/aD02NDg7dz05NzI7YXBwaWQ9eXRhY2h5b24-/”/>

The logo of the Beijing Stock Exchange in China can be seen on a stock chart in this illustrative photo taken on November 12, 2021. Photo: Reuters

About four million investors – those with at least 500,000 yuan of assets in stock accounts – are now eligible to trade stocks on the Beijing Stock Exchange, according to the exchange. Qualified Foreign Institutional Investors (QFII) and licensed foreign traders holding the yuan offshore can also buy and sell shares on the Beijing Stock Exchange, he added. About 85 percent of these registrations are private companies, while the remainder are partly public entities.

The minimum capitalization to be listed in Beijing is 200 million yuan ($ 31.3 million). The operator promised a faster listing approval process and will tolerate a wider daily trading band.

It will take two months to process registration requests, compared to three months for the Shanghai Star Market. Its daily cap of 30% on stock movements is more flexible than the 20% allowed on the Star Market and the 10% for parent companies in Shanghai and Shenzhen.

“The establishment of the new scholarship can help improve confidence in the development of [smaller companies] and innovation, ”said Chris Liu, portfolio manager at Invesco. “It also helps reduce the economy’s dependence on bank loans and a high leverage ratio. “

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