The STAR Market: Comprehensive Support for New Quality Productive Forces and Commitment to Technology Finance

(Shanghai Stock Exchange Global Investors Conference, on the morning of November 8, 2024)

Wang Bo

Distinguished guests and friends:

Good morning, and welcome to this year's Shanghai Stock Exchange Global Investors Conference. Today, my topic is The STAR Market: Comprehensive Support for New Quality Productive Forces and Commitment to Technology Finance. New quality productive forces stem from technological innovation and mature through effective allocation of resources. The capital market naturally possesses the function and advantage of resource allocation, which could provide fertile ground for cultivating and strengthening new quality productive forces. Shanghai Stock Exchange has been thoroughly implementing General Secretary Xi's important directives. Using the high-quality development of the STAR Market as our focal point, we are working to enhance our service quality and efficiency in supporting new quality productive forces. We are fully committed to technology finance and striving to develop the STAR Market into a pioneer and vital force in promoting new quality productive forces. Next, I would like to share with you the achievements of the STAR Market since its founding announcement six years ago, as well as our ongoing reform initiatives.

I. The STAR Market's focus on "key & core technology" has become a vivid practice in supporting new quality productive forces

On November 5, 2018, at the inaugural China International Import Expo, President Xi Jinping announced the launch of the STAR Market and a pilot registration-based IPO system at Shanghai Stock Exchange. Over the past six years, the STAR Market has focused on "key & core technology" and created an institutional framework aligned with the growth needs of tech-driven companies. The STAR Market has fully leveraged its institutional advantages of being a "testing ground" for reform, and both the STAR Market and the registration-based system have expanded their influence. The investment value of STAR Market-listed companies continues to grow, as we focus on building it into a strategic platform that supports the entire lifecycle of new quality productive forces.

The first is to guide capital flow toward "key & core technology" companies and new quality productive forces. The STAR Market has supported 577 companies in going public, with total IPO fundraising exceeding 910 billion yuan. Six strategic emerging industries have developed in a "chain-cluster" pattern. Integrated circuit companies cover various segments of the industrial chain, biomedical companies run business in major fields such as oncology and major infectious diseases, while photovoltaic and power battery sectors have reached considerable scale. Industry leaders have emerged, with Semiconductor Manufacturing International Corporation, Shanghai United Imaging Healthcare Co., Ltd., China Railway Signal & Communication Corporation Limited, and Jinko Solar Co., Ltd. leading the development of new quality productive forces. The diverse and inclusive listing requirements better accommodate the development characteristics and needs of tech companies. Various special-type enterprises successfully went public, including 54 unprofitable companies at the time of listing, 8 companies with special shareholding structures, 7 red-chip companies, and 20 companies listed under the fifth set of standards, all on a positive growth trajectory. Meanwhile, the STAR Market has streamlined the entire process from fundraising to investment, management, and exit, fostering a market ecosystem that encourages "early-stage, small-scale, long-term, and key & core technology" investments, driving nearly 600 billion yuan in pre-listing venture investment.

The second is to empower technological innovation, with continuous breakthroughs emerging and opening up to the global market. Innovative pharmaceutical companies on the STAR Market have received approval for 19 Class 1 new drugs with "global first" status, accounting for one-sixth of all domestically developed Class 1 new drugs approved during the same period. For example, BeiGene, Ltd.'s core product "Brukinsa" has been approved in more than 70 countries and regions worldwide, becoming the first Chinese innovative drug to achieve global sales exceeding USD 1 billion. In September this year, Shanghai Junshi Biosciences Co., Ltd.'s core product, Toripalimab, received approval for two additional indications, becoming the first and only drug in Europe approved for the treatment of nasopharyngeal carcinoma. In the advanced rail transit sector, companies like China Railway Signal & Communication Corporation Limited, Zhuzhou CRRC Times Electric Co., Ltd., China Railway High-speed Electrification Equipment Co., Ltd., and Beijing Tieke Shougang Railway-Tech Co., Ltd. have supported China's first overseas high-speed rail export—the Jakarta-Bandung High-Speed Railway project in Indonesia, facilitating the successful international adoption of Chinese standards. In the artificial intelligence field, Beijing Kingsoft Office Software, Inc. has reconstructed its office software using large language models, with its main products reaching 600 million monthly active devices.

The third is to support the accelerated development of green productive forces and enhance sustainable development through technology. As the world's second-largest economy, China is a key practitioner and promoter of global sustainable development. In recent years, the STAR Market has actively supported financing for green industries such as new energy and energy conservation, with related listed companies now reaching a total market value exceeding 500 billion yuan. These companies cover various segments, including photovoltaic, wind power, energy storage, power batteries, and solid waste disposal, driving green transformation in industries through collective efforts. Over the past year, 189 STAR Market-listed companies have independently disclosed social responsibility reports, ESG reports, or sustainable development reports, showing improvements in both quantity and quality of information disclosure. Based on their own circumstances, these listed companies have actively integrated ESG concepts and requirements into their business models and management systems. They continue to explore Chinese ESG practices and enrich the Chinese perspective within ESG standards.

II. Deepening reform in the STAR Market to build it into a pioneer and vital force in driving new quality productive forces

The STAR Market carries the responsibility of being a "testing ground" for deepening capital market reforms. Based on the nature of technological innovation and characteristics of new quality productive forces, it continues to advance reforms in various systems including financing, equity incentives, and M&A. Recently, under the guidance of the China Securities Regulatory Commission, Shanghai Stock Exchange has been accelerating the implementation of innovative reform measures and typical cases, including the "STAR Market Eight Measures" and "Six M&A Measures." These efforts have achieved positive results in activating the M&A market, optimizing issuance and underwriting mechanisms, and accelerating the development of index products.

At the same time, we can see that, under the support of various capital market reform measures, there is a continuous increase in the investment value of STAR Market-listed companies. First, a continuous surge of innovative vitality has emerged. The STAR Market maintains an average R&D intensity above 10%, ranking first among all A-share boards. 136 companies have received national science and technology awards, including the National Science and Technology Progress Award. Second, business performance has shown steady growth. Since its establishment, the STAR Market has achieved compound growth rates of 23% and 24% in operating revenue and net profit attributable to parent company shareholders, respectively. Over 40% of companies have maintained a compound revenue growth rate exceeding 20% in the past three years. More than 20% of companies rank first nationally in their niche markets or specific products, and 35 companies have become number one in their field in the global market. Third, there is the continuous improvement in the ability to generate returns. To date, 90% of companies have paid cash dividends, with cumulative payments exceeding 140 billion yuan. Over 70% of companies have distributed dividends in two or more years. Fourth, the investment ecosystem has gradually improved. The STAR Market has developed a system of 25 indices covering "broad-based + thematic + strategic" categories. The total scale of index products has reached 290 billion yuan, accounting for 6.5% of the STAR Market's tradable market value, continuously attracting incremental funds and long-term capital inflow. Among these, the STAR 50 ETF product has reached 210 billion yuan in scale, making it the third-largest index product in the A-share market, following only the CSI 300 ETF and CSI 500 ETF.

On the new journey of deepening reform, Shanghai Stock Exchange will further leverage the STAR Market's role as a "testing ground" for reform, continuously deepen reforms, provide comprehensive support for new quality productive forces, and strive to build the STAR Market into a pioneer and vital force in driving their development.

First, we will accelerate the implementation of the "STAR Market Eight Measures." We will further strengthen the board's role as a strategic platform for improving resource allocation efficiency in new quality productive forces sectors. This includes enriching multi-level capital market offerings in equity and debt financing, M&A, and equity incentives. Additionally, we will work to strengthen coordination with the banking system's financing tools, improve the index and product lineups, and provide comprehensive support for the development of new quality productive forces.

Second, we will increase support for M&A in the science and technology innovation field. We will support listed companies in fully utilizing M&A tools to achieve efficient integration of key technologies and quality resources, continuously generating new momentum for technological innovation and industrial development.

Third, we will advance the "corporate value and return enhancement" initiative. We will guide listed companies in fundamentally transforming their development concepts, strengthening their responsibility awareness for exploring innovative development models and enhancing investment value, and helping companies pursue high-quality development.

Fourth, we will promote deeper communication between STAR Market-listed companies and investors, particularly international investors. Many STAR Market-listed companies have controlling shareholders and management teams with overseas work and study experience, and their products and services are globally distributed, which lays the ground for smooth communication with international investors. We will encourage STAR Market-listed companies to leverage this advantage, making the STAR Market a model for the opening up of China's capital market.

Finally, I thank you all for your continued care and support for Shanghai Stock Exchange and the STAR Market. We will continue to work together with all market participants to further improve the ecosystem for technology finance services, better serve the development of new quality productive forces, and provide stronger momentum for advancing Chinese modernization.

Thank you!