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On November 5, 2018, General Secretary Xi Jinping announced the establishment of the STAR Market at Shanghai Stock Exchange (SSE) and the implementation of piloting registration-based IPO system. The STAR Market has gone through six years, achieving continuous achievements in promoting scientific and technological innovation and the development of new quality productive forces. As of November 5, 2024, the number of companies listed on the STAR Market reached 577, with a total market value exceeding RMB 6.2 trillion.
The STAR Market focuses on serving six strategic emerging industries, with its positioning highly aligning with the needs of developing new quality productive forces. As of November 5, 2024, 577 companies were listed on the STAR Market, all belonging to strategic emerging and high-tech industries. The capital raised through IPOs and refinancing respectively amounted to RMB 914.2 billion and RMB 162.3 billion, totaling over RMB 1 trillion, strongly supporting the development of new quality productive forces. In the industrial chains of key core technologies such as integrated circuits, biomedicine, and new energy, the STAR Market companies have gathered momentum and gradually demonstrated agglomeration and demonstration effects. With the capital and institutional support in the capital market, the new quality productive force cluster on the STAR Market has grown stronger. Over the past four years, the compound growth rates of operating revenue and net profit attributable to the parent company of STAR Market companies reached 23% and 24% respectively compared with 2019, ranking the STAR Market first among all A-share boards.
The STAR Market companies continue to foster new quality productive forces and be at the forefront to promote greater self-reliance and strength in science and technology. Following the R&D investment of the STAR Market exceeding RMB 100 billion for the first time in 2022, the amount recorded RMB 156.1 billion in 2023 and RMB 103.9 billion in Q1-Q3 of 2024, both surpassing twice the net profit attributable to the parent company over the same period. Since the launch of the STAR Market, the average R&D intensity of companies listed on the board has stayed at a high level above 10%. The median R&D investment intensity in Q1-Q3 of 2024 reached 12.6%, continuing to lead A-share boards. The core technologies of 60% of STAR Market companies have reached the international or domestic advanced level, and the products or research projects of 30% are pioneering in the corresponding industries. These companies have amassed over 110,000 invention patents, averaging 200 per company.
The STAR Market companies have intensively promoted their products globally. By the end of 2023, more than 70% of these companies had achieved overseas sales, generating a combined overseas revenue of RMB 405.501 billion, accounting for 30% of the overall revenue on the board. These companies are competing in the upper reaches of the global value chain with their technological achievements, introducing "Chinese solutions" and "Chinese standards" to the international stage with big strides. For example, 10 pharmaceutical companies listed on the board have granted overseas pharmaceutical companies the rights to their product patents through license-out agreements. For another example, companies listed on the board have carried out more than 20 large-scale overseas equity acquisitions and aided businesses in overtaking others by integrating key resources such as advanced technologies, products, and channels.
Since it took the lead in launching the "Corporate Value and Return Enhancement" initiative across various A-share boards in January 2024, the STAR Market has encouraged companies to formulate action plans focused on six aspects: the main business, development of new quality productive forces, investor returns, investor communication, corporate governance, and responsibilities of the "key minority". As of October 2024, 464 companies have responded positively, with the coverage exceeding 80%. Since the launch of the board, 90% of the companies listed have issued cash dividends, with a total amount surpassing RMB 140 billion. About 60% of them have implemented share repurchase programs since listing, with a total amount exceeding RMB 35 billion. STAR Market companies have integrated sustainable development into their business strategies to support green economic and social transformation. From 2019 to 2023, all of these companies disclosed ESG-related information in their annual reports. Moreover, these companies have actively promoted the sharing of scientific and technological innovation achievements and made remarkable achievements in aspects such as caring for life and health, improving infrastructure, and promoting green and low-carbon development.
The STAR Market plays an irreplaceable role in directing various resource elements towards scientific and technological innovation and facilitating the positive cycle of science and technology, industries, and capital. It has effectively promoted the integration of innovation, industrial, capital, and talent chains. In terms of talent attraction, scientist entrepreneurship has become a hallmark of the STAR Market. In terms of fund guidance, the board has fostered an atmosphere of "investing in early-stage businesses, investing in small companies, and investing in core technology". The STAR Market has emerged as the most well-established and index-oriented board in China. By the end of Q3 of 2024, the number of active accounts held by professional institutional investors in STAR Market-listed companies exceeded 50,000. Institutional investors accounted for over 30% of the positions and 50% of the transaction volume. The STAR Market has formed an index system consisting of broad-based, thematic, strategic, and other indexes. With the number of indexes reaching 25, it has gained increasingly significant market influence.
The STAR Market has consistently adhered to the principles of stability and strictness, enhancing the quality of listed companies through strong supervision. By closely monitoring the fulfillment of the responsibilities of the "key minority", reinforcing the duties of "gatekeepers", imposing "severe punishments and heavy penalties" in typical cases, and addressing violations "as soon as they emerge", the SSE guides listed companies, intermediaries, and other market players to jointly maintain the standardized and orderly ecosystem of the STAR Market.
By implementing the pilot registration-based IPO system, the STAR Market has contributed experience that can be replicated and promoted, providing a useful reference for the reform of other boards such as the ChiNext Board and the Main Board. In June 2024, China Securities Regulatory Commission formulated and issued the "Eight STAR Market Measures", proposing new reform measures. This affirms the role of the STAR market as the "experimental field" for institutional reform and its effectiveness in promoting scientific and technological innovation over the past five years. Additionally, this sets a course for furthering the STAR Market reform and accumulates experience and lays the groundwork for further comprehensively deepening the capital market reform. Currently, a series of stage achievements have been made in revising rules, implementing exemplary cases, researching and developing index products.
Excerpt translated from Yicai on November 5, 2024
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The above information is provided for reference purposes only and does not constitute investment advice.
