The Star Market has been on a roll having completed more initial public offerings (IPOs) and raised more capital than any other Chinese bourses, on the mainland or in Hong Kong, this year. The Nasdaq-style bourse has achieved all that during the depths of the Covid-19 pandemic, having been in operation for only a year. Now, people even fret a bubble is forming as many of its listed members enjoy sky-high valuations. It is time to be cautious, but also to recognise success. The new bourse is an experiment in market reforms, a clear indication of Beijing’s awareness that the Chinese markets need to improve markedly to attract new capital and interest from professional and foreign investors and underwriters. Policymakers may now be encouraged to further loosen capital controls. Designed to encourage China’s home-grown technology champions to stay home, the Star – which officially stands for the Shanghai Stock Exchange Science and Technology Innovation Board – has catered to institutional investors from day one, rather than retail punters who dominate the Shanghai and Shenzhen exchanges. The idea is that Chinese pension funds and institutional investors should reap the capital gains of the nation’s corporate champions. Why not? Two of the world’s 10 most valuable companies are Chinese – Alibaba, owner of the Post , and Tencent. Neither is listed on the mainland. So the Star Market provides an arena for future champions to raise capital, and spread benefits of their growth. Opening up China’s capital markets fits well with the overall macroeconomic model in switching from export-led growth to a consumption-oriented one. The Chinese economy is still dominated by many inefficient state-owned enterprises that make up most of the valuation on mainland stock exchanges. The Star Market can attract new capital and expertise from professional underwriting from investment banks and money from global investors. But they do not want to buy any old state-run firms. Tech companies with far greater growth prospects will whet their appetite. The rules for listing are much more streamlined and transparent to encourage efficiency. The Star Market allows companies with dual-class share structures, as well as those listed outside the country. This allows US-listed firms to come home. Already, the Star Market has helped China’s largest semiconductor producer to raise more capital after delisting from New York. Also, many mainland unicorns are backed by foreign private-equity funds. With dual listings, those investors can exit through Hong Kong, while enjoying higher valuations on the mainland. The world has yet to emerge from the Covid-19 pandemic and regulators need to be mindful of bubbles. But if the Star Market continues to turn out quality tech companies, it will stand China’s capital markets in good stead.