BOFIT Viikkokatsaus / BOFIT Weekly 2021/48

Trading on the Beijing Stock Exchange launched on November 15 with trading in shares of 81 firms. The new exchange’s special mission is to help small, innovative growth firms meet their financing needs. Trading is restricted to professional and institutional investors. On the first day of trading, the total turnover was 9.6 billion yuan (1.5 billion US dollars) and the market capitalisation of traded firms was settled at around 290 billion yuan (46 billion US dollars). The Beijing exchange is still a small potato, however. The market capitalisation of the Shanghai Stock Exchange, for example, is more than 170 times greater than that of the Beijing Stock Exchange. Since its strong opening day, the daily turnover on the Beijing exchange has drifted downward and stabilised at around 2 billion yuan.

The opening day included ten new companies and 71 firms previously listed on China’s over-the-counter exchange, the National Equities Exchange and Quotations or NEEQ (BOFIT Weekly 36/2021). The share prices of the newly listed firms soared on average by about 200 % on the first trading day. Even with mandatory 10-minute halts in trading, there is effectively no limit on how much prices can change on their IPO day. After the first day of trading, however, share prices are limited to daily fluctuations of no more than 30 %.

One firm has been added to the Beijing list since the first trading day. Firms must meet certain requirements prior to listing on the Beijing Stock Exchange. These include having been listed for the preceding twelve months on the NEEQ innovation list, a market cap of at least 200 million yuan ($30 million) and net assets worth at least 50 million yuan ($7.7 million). A firm must issue at least 1 million shares in its IPO, must have at least 200 shareholders, and a quarter of shares must be held by public investors. The minimum public ownership requirement for larger firms (share capital over 400 million yuan) is 10 %. Listing rules can also be modified with the consent of the China Securities Regulatory Commission (CSRC).

After a strong start, the daily total trading volume on the Beijing Stock Exchange has fallen to around 2 billion yuan

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Sources: Beijing Stock Exchange, CEIC and BOFIT.


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