BSE off to good start in boosting small and medium-sized firms

One month on, the Beijing Stock Exchange is well on its way to realize its mandate of nurturing technologically advanced small and medium-sized enterprises, market mavens said.

The BSE, which began official trading on Nov 15, has seen its market stabilize over the course of the first month of its operations, amid increasing interest evinced by institutional investors and a growing list of potential IPO candidates.

Trading volume in the first month was 47.9 billion yuan ($7.5 billion). Share prices of the 11 companies that made their IPOs on the BSE have surged 110.84 percent on average.

As for the 71 companies transferred from the NEEQ Select to the BSE, their shares also surged 30 percent on average since the inception of the new bourse on Sept 2.

The BSE is based on the NEEQ Select, the highest tier of the eight-year-old National Equities Exchange and Quotations system.

While share prices fluctuated up to 25 percent in the run-up to Nov 15, the rate has narrowed to 5.28 percent over the past few trading days.

This, the BSE said, indicates a stable price momentum as well as success in allowing market forces to determine pricing.

As of Dec 14, more than 4.6 million investors have received approval to trade on the BSE, up from 4.3 million on Nov 15, suggesting a steady rise in interest in the new bourse among investors.

BSE Chairman Xu Ming said the new bourse is virtually the first step that innovative SMEs could take in their journey toward the capital market for funding. The first step could prove a portal to the "main battlefield"－the other boards of the A-share market in Shanghai and Shenzhen.

By encouraging innovative startups to tap the capital market for financing, the BSE has already gained a positive reputation among market participants, proof of which is the increasing trading volume, Xu said.

In addition, trading in shares of companies listed on lower tiers like the NEEQ Innovation and the NEEQ Base has also received a boost, he said.

For instance, the NEEQ component index has risen more than 15 percent since Sept 2, when the central authorities announced the BSE will be set up. The combined daily trading value of the NEEQ Innovation and the NEEQ Base reached 886 million yuan on Tuesday, up 1.83 times from the level before Sept 2.

Institutional investors have shown strong interest in BSE-listed companies. The first eight BSE-themed mutual fund products released on Nov 19 consisted of products that touched the respective 500 million yuan subscription limit within half a day.

As of Tuesday, 28 BSE-listed companies have released as many as 40 research reports on them prepared by institutional investors. While private equity and venture capital firms used to conduct most of such startup-focused equity research until recently, mutual funds, insurers and asset management firms now figure among the credits in survey reports.

As professional asset management institutions, mutual funds shoulder much responsibility in serving the real economy and optimizing asset allocation, said Jiang Xiangyang, chairman of Bosera Funds.

Mutual funds should give full play to their advantages in technology-related investment and research, in order to provide more value to investors and further facilitate the country's high-quality development, he said.

Information in the public domain showed there were 187 companies under the IPO guidance of the BSE. And 104 of them have invested more than 4 percent of their sales revenue in research and development.

Chen Youxin, head of equities market at China Securities, said more than 100 companies will likely complete IPOs on the BSE next year.

With the relatively new registration-based IPO mechanism now spanning the entire A-share market, more innovative SMEs will now stand a better chance of receiving funding from the market, which can help them to not only grow but drive the real economy, he said.