(Yicai) July 22 -- The Star Market, Shanghai’s Nasdaq-like stock trading venue, opened seven years ago today, and in that time its 611 listed companies have raised more than CNY1.2 trillion (USD177.1 billion) between them and have a combined market capitalization of over CNY13 trillion (USD1.91 trillion) as of yesterday, according to a report prepared for the anniversary.

Chinese President Xi Jinping opened the Star Market, officially known as the Science and Technology Innovation Board, on July 22, 2019, after proposing its creation nearly a year before. Launched with an initial batch of 25 stocks, the Star Market was set up to help homegrown hard-tech companies secure public funding by piloting a registration-based listing system that was subsequently extended to all Chinese mainland stock markets at the start of 2023.

Star Market firms have spent nearly CNY900 billion (USD132.9 billion) on research and development over the seven-year period, according to the anniversary report published today by the Star Market Research Center. Their median R&D investment intensity was nearly 13 percent in the past three years, ranking first among mainland stock exchanges.

In comparison, the median R&D investment intensity of stocks listed on the Shanghai Stock Exchange’s main board was 3.4 percent, and those of the Shenzhen Stock Exchange’s main board and its ChiNext tech board were 3.7 percent and 5.4 percent, respectively.

The Star Market's registration-based system for initial public offerings has provided high-tech enterprises with a more convenient listing channel, several executives at businesses listed on the platform told Yicai.

Furthermore, they said, the Star Market’s flexible and convenient policy framework has strongly supported companies’ financing activities and innovation-driven growth, allowing them to focus on their main businesses, thereby driving continuous technological upgrades and business expansion, the business leaders said.

“Our R&D direction and goals haven't changed since before our IPO, but the capital raised has accelerated the pace of our R&D," said Xu Jianyi, chairman of Jianxin Superconducting Technologies, which listed last December. Listing has given the Cixi-based firm an advantage in recruiting top-tier talent, while increased orders have enabled greater investment in production capacity, he noted.

Suzhou HYC Technology, the first firm to list on the Star Market, allocated the proceeds from its IPO and convertible bonds to areas such as display semiconductors, greatly enhancing its technological capabilities and resolving production bottlenecks, Cheng Zhong, deputy general manager and chief financial officer, told Yicai.

Equity incentives and employee stock ownership plans have also become important tools for attracting high-end talent, Cheng pointed out.

Three Sectors Dominate Listings

Over the past seven years, the Star Market has focused on industrial ecosystems such as integrated circuits, biomedicine, artificial intelligence, and high-end manufacturing. Together, IC, biomedicine, and high-end gear production account for over 80 percent of the total number of listed firms.

These three sectors have established significant sway over global supply and pricing within mature markets, a source at investment bank China International Capital Corporation told Yicai. Some leading businesses in niche segments are even competing alongside or slightly ahead of their overseas counterparts, the person said.

Still, Chinese companies still trail in the second or third rank in certain upstream materials and key components, though they are rapidly catching up, the insider noted.

In terms of institutional reform, the Star Market introduced two new measures on June 17, aiming to expand the scope of the fifth set of listing criteria to include AI, thus promoting the listing of high-quality model developers, and to support the IPOs of more hard-tech firms in cutting-edge fields like quantum technology, biomanufacturing, and embodied intelligence.

Companies such as Zhipu AI, also known as Z.ai internationally, and MiniMax Group are advancing plans to pursue listings on China’s mainland stock markets.

The expansion of the fifth set of listing criteria effectively redefines large language models from being merely “technical tools” to “new infrastructure” with independent business ecosystems, the CICC source noted, adding that it opens up domestic financing pathways for LLM developers that have core technologies but are not yet profitable.

Editor: Futura Costaglione