Beijing Stock Exchange: three of four debuts soar in financial market created to extend financial lifeline to small companies

Sixty stocks rose at open in Beijing exchange debut, with gains ranging from 0.2 per cent to almost 500 per cent, before the rally faded at the close

Small-caps are no longer a scarcity and their valuations will be reassessed, analyst says

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The National Equities Exchange and Quotations (NEEQ) building in Beijing, which transferred 70 of the first 81 stocks to commence trading in the new Beijing Stock Exchange. Photo: Handout.

Published: 9:48am, 15 Nov 2021Updated: 11:29pm, 15 Nov 2021

The Beijing Stock Exchange began trading on Monday, with three-quarters of 81 carefully selected stocks opening higher in their debuts, underpinning the Chinese president’s pledge to support small and medium enterprises that he has dubbed the “little giants” of the world’s second-largest economy.

Sixty of the stocks advanced by between 0.2 per cent and almost 500 per cent when trading commenced, before the rally faded at the close of market. Shares of Henan Tongxi Transmission, a maker of transmission shafts and other vehicle parts, jumped 494 per cent as the best performer, while Tonghuijiashi (Beijing) Information Technology was the worst with a 16 per cent loss.

At Monday’s close, 19 companies closed higher, 59 ended lower while three were halted.

Seventy-one of the debutantes were transferred from an over-the-counter market in the Chinese capital known as the National Equities Exchange & Quotations, or NEEQ, which had struggled to attract investors since its formation in 2012 because of the lack of liquidity. Ten stocks traded for the first time.

Still, the spruced up Beijing exchange – which came into operation two months after President Xi Jinping ordered its establishment – is an attempt at handing a financial lifeline to help the private sector and innovative companies raise capital.

The creation marks another milestone in the expansion of China’s US$12.4 trillion equity market, already the world’s largest after the US market. It adds to the bourses in Shanghai and Shenzhen, which were established in 1990 as a test of China’s economic reforms.