It all stems from this unchanging fact that there have been so many changes and fluctuations in the opening four years of the Science and Technology Innovation Board | stocks | changes
On July 22nd, the Science and Technology Innovation Board celebrated its 4th anniversary of opening. In the past four years, the number of companies listed on the Science and Technology Innovation Board has increased from the first batch of 25 to the current 546. At the same time, there are 133 companies under review, with an initial financing amount of 858.2 billion yuan, accounting for 42% of the total A-share IPO financing during the same period. The refinancing amount is nearly 135.5 billion yuan, with a total fundraising of nearly trillion yuan. The total market value has increased from less than one trillion yuan at the beginning to nearly 7 trillion yuan.
The number of listed companies, the quality of net revenue and profit, and the content of hard technology... In the four years since the opening of the market, this "experimental field" of China's capital market has been constantly undergoing positive changes. And these changes ultimately stem from a constant - that is, adhering to the positioning of "hard technology" unchanged.
The market level is constantly improving
Data shows that in 2022, the operating revenue and net profit of companies listed on the Science and Technology Innovation Board exceeded 1 trillion yuan and 100 billion yuan respectively. In the past three years, the compound growth rates of operating revenue and net profit have reached 30% and 59%, respectively, ranking first among all sectors of the A-share market. It has become the preferred place for China's "hard technology" enterprises to go public, injecting new development momentum into the Chinese economy.
It is worth mentioning that the purity of the "hard technology" content in the sector is higher. In 2022, the R&D investment scale of companies on the Science and Technology Innovation Board exceeded 100 billion yuan for the first time, a year-on-year increase of 28%, accounting for 16% of operating revenue, far higher than other market sectors. On average, each company has 30% research and development personnel and 152 invention patents.
A group of bottleneck enterprises, representative enterprises, and industry leaders with strong independent innovation capabilities that have broken foreign monopolies have gone public on the Science and Technology Innovation Board, further demonstrating the industrial agglomeration and demonstration effects of the board.
The distribution of the Science and Technology Innovation Board industry is concentrated in the high-tech industry and strategic emerging industries -101 listed companies in the integrated circuit field, accounting for half of similar A-share companies. It covers the entire industry chain of upstream design, midstream contract manufacturing, downstream packaging and testing, as well as equipment and materials. It gathers many backbone enterprises such as contract manufacturing leader SMIC International, silicon wafer leader Shanghai Silicon Industry, and domestic CPU leader Longxin Zhongke. 111 companies have been listed in the biopharmaceutical field, becoming the main global listing locations outside of the United States and Hong Kong, China. A group of characteristic enterprises have also gathered in the fields of new energy such as photovoltaics and power batteries, new materials such as carbon fiber and superconducting materials, as well as high-end equipment such as industrial robots and rail transit equipment. Among the 56 national key research and development plans organized by the Ministry of Science and Technology during the 14th Five Year Plan period, 36 science and technology innovation board companies participated in 22 of them, covering multiple key fields such as basic scientific research, key instruments, and cutting-edge materials.
At the same time, the internationalization level of the Science and Technology Innovation Board is steadily improving, and more and more international investors are starting to participate in the market. On the one hand, international investors actively participate in the issuance of new shares on the Science and Technology Innovation Board. Among them, QFII companies such as Singapore Government Investment Limited and Abu Dhabi Investment Authority have participated in the strategic placement of 7 companies on the Science and Technology Innovation Board, and international investors continue to strengthen their strategic cooperation with these companies. On the other hand, the shareholding scale of international investors in the secondary market continues to grow. Since the opening of the Science and Technology Innovation Board in 2019, the level of foreign investment participation has been continuously improving. As of the end of June 2023, the proportion of shares holding the circulating market value of the Science and Technology Innovation Board has increased from 0.56% at the end of 2019 to the current 3.6%.
Market insiders point out that from the perspective of promoting the gathering of funds, talents and other resources in the field of science and technology innovation, the establishment of the Science and Technology Innovation Board and the pilot registration system are undoubtedly the most important and effective policy measures to support scientific and technological innovation in recent years. This market has played a good role in leveraging national and social capital, attracting excellent entrepreneurial and innovative talents, and promoting a virtuous cycle of capital in the science and technology industry.
Institutional exploration continues to deepen
Behind the positive changes in the market is the continuous optimization and upgrading of the science and technology innovation board system.
After the implementation of the comprehensive registration system, the review work for the issuance and listing of the Science and Technology Innovation Board has been further optimized. At the same time as the Shanghai Stock Exchange releases funds, it increases its efforts to regulate and urge all market entities to return to their positions and fulfill their duties, creating a good market ecosystem. Through full chain supervision such as audit inquiries, on-site supervision, and self-discipline, a total of 235 enterprises were eliminated in the registration process of the Science and Technology Innovation Board, with a elimination rate of about 29.5%, effectively reducing the number of enterprises applying for positions with diseases.
The "open door review" mechanism continues to improve, and the standards, procedures, content, process, and results of the review and registration on the Science and Technology Innovation Board are all made public to the public. The spirit of "shop assistants" is enhanced to enhance market sense of gain. Since the beginning of this year, the Shanghai Stock Exchange has received 108 pre application consultations and communications for the Science and Technology Innovation Board, an increase of 86% compared to the same period last year; Received 313 projects under review, with an average of 2.6 companies per day, and answered over 26000 consultation calls. At the same time as the comprehensive registration system is implemented, the "Initiative Letter for Jointly Promoting Open Door Office Audit" will be launched, explaining the audit process and contact information to key personnel such as the chairman, general manager, and board secretary of the applying enterprise, clarifying integrity discipline, and reducing the "temperature difference" and "barrier" between the applying enterprise and the applicant enterprise.
As the review system of the Science and Technology Innovation Board evolves, the trading system is also innovating. On October 31, 2022, the Market Maker Mechanism of the Science and Technology Innovation Board was officially launched. This is the first time that China's stock market has introduced this system based on the bidding trading mechanism and formed a new mixed trading model. Since the launch of the business, market liquidity, pricing efficiency, and activity have all been effectively improved.
The number of market making stocks continues to grow, and the coverage of market making stocks is rapidly expanding. As of the end of June 2023, 15 market makers have covered 150 stocks on the Science and Technology Innovation Board, accounting for 28% of the total number of stocks on the board. They involve six major industries on the board, balancing large, medium, and small cap stocks, and focusing on serving stocks with slightly weaker liquidity.
Market making reduces stock price volatility, improves market stability, and improves pricing efficiency. In terms of intraday amplitude, the intraday amplitude of market making stocks decreased from 4.19% to 3.48%; In terms of intraday volatility, the volatility of market making stocks decreased from 0.49% to 0.41%. The decline in stock volatility is more pronounced when multiple market makers work together, while the intraday volatility of stocks with six market makers working together decreases by 23% and 22%, respectively. With the participation of market makers, the volatility caused by short-term supply-demand imbalance in the market is reduced, and stock prices become more stable.
The index ecosystem is forming
On the occasion of the 4th anniversary of the opening of the Science and Technology Innovation Board, the Shanghai Stock Exchange and CSI Index Company released the Shanghai Science and Technology Innovation Board 100 Index. The Science and Technology Innovation 100 Index selects 100 securities with medium market value and good liquidity from the Science and Technology Innovation Board as index samples, and together with the Science and Technology Innovation 50 Index, forms the Shanghai Science and Technology Innovation Board Scale Index series, reflecting the overall performance of securities of listed companies with different market values in the Science and Technology Innovation Board market. The total market value of the two index samples accounts for about 65% of the total market value of listed companies on the Science and Technology Innovation Board.
On June 5th recently, the first on exchange risk management tool on the Science and Technology Innovation Board, the Science and Technology Innovation 50 ETF option, was successfully listed. Coincidentally, on the 6th, the A-share market saw a significant correction, with the Sci Tech Innovation 50 Index closing down 2.73%. During the market correction, the hedging function of the options market was immediately fully utilized, and the selling pressure on spot was reduced during the market downturn.
In recent years, the application of the Science and Technology Innovation Board index series products has been continuously enriched. At present, the Shanghai Stock Exchange and CSI Index companies have preliminarily established a science and technology innovation board index system represented by the Science and Technology Innovation 50 Index, covering various types of broad base, theme, strategy, etc. As of the end of June 2023, a total of 11 science and technology innovation board series indices have been released, including 9 theme indices in addition to the science and technology innovation board 50 index, focusing on characteristic strategic emerging industries and representative science and technology innovation board listed companies in different regions, as well as 1 strategy index, focusing on high growth science and technology innovation board listed companies.
These indices have broadened investment channels and guided more funds to flow into the field of science and technology innovation. As of the end of June 2023, there were a total of 38 index funds tracking the Science and Technology Innovation Board index series both domestically and internationally, with a total size of 117.1 billion yuan. Among them, the Science and Technology Innovation 50 Index has become the third largest domestic market stock index in terms of tracking product size. By the end of June 2023, the domestic and international product scale of the Science and Technology Innovation 50 Index had reached 108.1 billion yuan, making it the index with the fastest growth in tracking product scale. At the same time, the ecosystem of Sci Tech Innovation 50 Index products continues to enrich. Since 2020, various fund companies have successively launched 8 Sci Tech Innovation 50 ETFs and 2 Index Enhanced ETFs on the Shanghai Stock Exchange. In addition, they have also launched 2 over-the-counter index funds and 6 ETF linked funds, providing diversified choices for investors to participate in the Sci Tech Innovation Board market.
It is reported that in the next step, the Shanghai Stock Exchange and CSI Index Co., Ltd. will continue to improve the index system of the Science and Technology Innovation Board, with a focus on improving the multi-level broad base index, and launching a multi-dimensional segmented theme strategy index to promote the development of ETF products related to the Science and Technology Innovation Board, build an index product ecosystem, and facilitate investors to participate in science and technology innovation board investment efficiently and conveniently.
