In recent months, shares of small and medium-sized companies listed on the Beijing Stock Exchange have shown remarkable resilience in the face of a broader slump in local equities. The Beijing Stock Exchange 50 Index, which tracks early-stage innovative companies listed in the capital, rose an impressive 3.1% on Monday, with gains of over 19% from its October low.
Despite this bull market performance, the index has outperformed its larger, tech-heavy peer by a staggering 12 percentage points and the benchmark CSI 300 Index by a significant margin of 16 percentage points. This makes it a bright spot for China’s financial markets this quarter.
The strong rebound on the Beijing board can be attributed to several factors. Firstly, a wider fluctuation range of up to 30% allowed for its constituents in either direction compared to a span of up to 20% for other major stock exchanges such as Shanghai and Shenzhen gauges. Additionally, investors’ light positioning in these companies and regulators’ consideration to include eligible securities into the CSI cross-market index system are also catalysts for growth in this area of the market.
The largest exchange-traded funds tracking this index have assets under management (AUM) of around 228 million yuan ($31 million), indicating that investors are showing increasing interest in these companies. Launched two years ago with the aim of helping small firms raise funds and diversify China’s financial markets, the Beijing exchange has proven to be an important platform for growth and innovation within China’s business landscape.
Overall, the bull market performance of small and medium-sized companies listed on the Beijing Stock Exchange is a positive sign for China’s financial markets as it shows that despite global economic challenges, there is still potential for growth and innovation within certain sectors.