December 1, 2023 9:15 am

Beijing Stock Exchange 50 Index, which is a gauge of early-stage innovative companies listed in the capital, has outperformed its larger and tech-heavy peer by 12 percentage points and the benchmark CSI 300 Index by 16 percentage points. This measure has risen by 3.1% on Monday, with gains from an October low of over 19%. Despite a broader slump in local equities, shares of China’s small and medium-sized companies are poised to enter a bull market.

The strong rebound on the Beijing board this month can be attributed to several factors. One of them is a wider fluctuation range of 30% allowed for its constituents in either direction, compared to a span of as much as 20% for the Shanghai and Shenzhen gauges. Another factor is investors’ light positioning in these companies and regulators’ consideration to include eligible securities into the CSI cross-market index system. These catalysts have led to growth in this area of the market, making it a bright spot in China this quarter.

With assets worth around $31.9 million, the largest of around a dozen exchange-traded funds tracking the index indicates 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 making China’s financial markets more multifaceted. As such, it remains an attractive option for those looking for opportunities in this rapidly growing sector.

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