At two years old, Shanghai’s Star board is already bigger than Spain’s capital market and shields investors from global tech rout

The board, also known as the Science and Technology Innovation Board, entered its third year of operations on Thursday

If treated as a stand-alone market, Star Market would be ranked 20th in the world, ahead of Spain’s capital market

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Since trading commenced on July 22, 2019, listings on Star Market have ballooned to 311 from an initial 25, and their combined market value has grown to US$716 billion. Photo: Reuters

Published: 8:30am, 22 Jul 2021Updated: 10:46am, 22 Jul 2021

The Star Market, China’s Nasdaq-style board, which is celebrating its second anniversary, has emerged as a safe haven for investors seeking shelter from Beijing’s crackdown on technology companies.

The board, also known as the Science and Technology Innovation Board, on the Shanghai Stock Exchange has become a major listing venue for China’s smaller hi-tech companies looking to raise funds on their home turf. And as it entered its third year of operations on Thursday, it is being boosted by Beijing’s unending scrutiny of the country’s biggest technology companies, which has prompted investors to seek alternatives to stocks listed in Hong Kong on Star Market.

“Star Market is a test case for the reform of China’s capital markets,” said Wang Yang, analyst at Zheshang Securities in Shanghai. Most companies on the board were in sectors such as semiconductors, 5G and biopharmaceuticals, which are characterised by fast earnings growth, he added.

The board is the result of a direct push by Chinese President Xi Jinping, who mooted the idea at China’s first world import expo in 2018. Since trading commenced on July 22, 2019, listings on Star Market have ballooned to 311 from an initial 25, and their combined market value has grown to US$716 billion. If the board were to be treated as a stand-alone market, it would be ranked 20th in the world, ahead of Spain’s capital market, which is capitalised at US$704.7 billion.

China’s simmering tensions with the US and its latest edicts seeking to protect domestic users’ data have lifted the importance of Star Market, as the country needs a more efficient and well-functioning market to financially underpin technology firms and fend off the threat of an American technology blackout.

Moreover, the close scrutiny of Didi Global also signals top policymakers’ intentions of tightening their grip on overseas listings, potentially including those in Hong Kong, a move that could benefit Star Market.