In the face of initial hurdles, China’s Science and Technology Innovation Board (STAR Market) on the Shanghai Stock Exchange (SSE) is charting a promising path towards a bright future. Launched in 2019 amid escalating Sino-U.S. trade tensions, the STAR Market experienced a turbulent start, reflecting the adage “everything is difficult at the beginning.”
Within its first two and a half years, the SSE Science and Technology Innovation Board 50 Index surged by approximately 40 percent, showcasing investor enthusiasm for the new market. However, this was followed by a consecutive downturn of 46 percent, highlighting the volatility common in emerging markets. In comparison, the Shanghai Composite Index saw a rise of 19 percent before a decrease of 16 percent over the same period.
Despite these fluctuations and the challenging business environment brought on by the COVID-19 pandemic and global economic slowdown, the STAR Market demonstrated resilience and continued growth. Its market capitalization soared from 560.7 billion yuan ($77.31 billion) at inception to 5.17 trillion yuan by the end of May 2024. This growth increased its share of the total SSE market capitalization from 1.7 percent to 12.1 percent. Additionally, its turnover now accounts for 15.3 percent of the SSE, up from 5.6 percent at launch.
The STAR Market has also proven to be a robust platform for fundraising. In the previous year, its initial public offerings and seasoned financings comprised 40 percent and 11.5 percent of the SSE totals, respectively, according to iFind Financial Data. This notable capacity for fundraising underscores the market’s growing significance in China’s financial landscape.
The journey of the STAR Market reflects China’s broader commitment to fostering innovation and supporting high-tech industries. As the market continues to mature, it is poised to play a crucial role in connecting investors with cutting-edge enterprises, driving economic growth, and enhancing China’s influence in global finance.
Reference(s):
cgtn.com
