In Beijing, the China Stock Exchange for Entrepreneurs opens

In Beijing, the China Stock Exchange for Entrepreneurs opens

The Beijing Stock Exchange joins the Shanghai Stock Exchange and the Shenzhen Stock Exchange in mainland China. They are generally closed to foreign investors, however certain companies’ shares are traded in Hong Kong, a separate Chinese colony open to international finance.

President Xi Jinping said in September the Beijing exchange would “create a service-innovation-oriented main position for small and medium-size enterprises,” the ruling party’s term for private companies.

Investors are uneasy about the status of China’s entrepreneurs after the ruling party tightened control on tech companies by launching data-security and other crackdowns last year. Investors have knocked more than $1 trillion off the value of Tencent Holding and other tech giants on Wall Street and the Hong Kong exchange.

Chinese stock exchanges were set up to raise money for state-owned companies, which prompted entrepreneurs to go abroad for capital.

Story Highlights

  • In the midst of a crackdown on internet titans that has wiped more than $1 trillion off their market value abroad, a stock exchange set up in the Chinese capital to assist entrepreneurs commenced trading Monday with 81 companies.

  • The ruling Communist Party has promised more support for entrepreneurs who generate wealth and jobs but is tightening control over tech companies. They are under pressure to invest their own money in Beijing’s industry plans.

The Beijing exchange will accept smaller companies and wider price swings than Shanghai or Shenzhen, according to official media.

After their first day, prices will be allowed to fluctuate by a daily limit of 30% before trading is suspended. The Shanghai and Shenzhen exchanges are 10% one way or the other for the main bourse and 20% for their high-tech and small company boards.

On Monday, a maker of industrial parts, Henan Tongxin Transmission Co., soared by just over 500% in its market debut. Most other companies, many of which moved from other exchanges, rose or fell by single digit margins. The Beijing Stock Exchange has yet to announce an index to track the overall market’s movement. The name is a potential challenge: BSE already is used for India’s main exchange and indexes.

Shenzhen added a separate trading board in 2004 for private enterprises. Shanghai added a board for technology companies in 2019.