President Xi Jinping gave investors a surprise in 2018 when he floated the idea of a tech-focused board on the Shanghai Stock Exchange (SSE). He also gave China a powerful asset, as the board – later dubbed the Star Market – has become a financial engine powering breakthroughs in frontier technologies including artificial intelligence, robotics and semiconductors.
The Star Market, officially known as the Sci-Tech Innovation Board under the Shanghai bourse, now forms an important part of China’s US$16 trillion stock market. With a combined market capitalisation of 15.5 trillion yuan (US$2.3 trillion), it is home to a litany of domestic companies that Beijing is counting on to break out of dependence on cutting-edge technologies that Washington is determined to restrict.
From the beginning, the Star Market established itself as an example of deepening reforms in China’s stock market, which had often been criticised for failing to give investors access to the most vibrant parts of the economy, as well as for rigid regulations that resulted in an exodus of new-economy companies to overseas listings.
“Benefiting from the reform dividend, the Star Market is accelerating to become an innovative capital market that serves hard technologies, cultivates future industries and propels the high-quality growth of China’s economy,” said Hao Danyang, an analyst at Shenwan Hongyuan Group.
Listed companies on the market include Nvidia challengers Cambricon Technologies and Moore Threads Technology, as well as the nation’s biggest chipmaker, Semiconductor Manufacturing International Corporation (SMIC).
Xi’s plan in 2018 was interpreted by market watchers as a way of leveraging the capital market to support Beijing’s drive for technological innovation and domestic substitution.
On July 22, 2019, just seven and a half months after Xi’s unveiling, the Star Market started trading as a batch of 25 companies including Suzhou HYC Technology and Raytron Technology debuted.
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