Despite a broader slump in local equities, shares of China’s small and medium-sized companies are on track to enter a bull market. The Beijing Stock Exchange 50 Index, which measures early-stage innovative companies listed in the capital, rose by 3.1% on Monday alone, surpassing its October low by over 19%. This index has outperformed its larger, tech-heavy peer by 12 percentage points and the benchmark CSI 300 Index by 16 percentage points.
The recent rebound on the Beijing board can be attributed to several factors, including a wider fluctuation range of up to 30% allowed for its constituents compared to a maximum of 20% for Shanghai and Shenzhen gauges. Additionally, investors’ light positioning in these companies and regulators’ consideration to include eligible securities into the CSI cross-market index system have also contributed to this growth.
With around twelve exchange-traded funds tracking this index, it is clear that investors are showing interest in these companies. The Beijing exchange was launched two years ago with the goal of helping small firms raise funds and diversify China’s financial markets.