Mainland's youngest stock exchange mulls measures to attract investors

The Beijing Stock Exchange is speeding up processing of IPO applications, which is expected to significantly increase the number of companies that get listed on the Chinese mainland's third and newest bourse that started trading in November.

The exchange said on Friday it expects the number to accelerate in the second half of this year.

The bourse also said it has stepped up efforts to launch an index tracking market performance of Beijing-listed companies at an appropriate time. The index will prove useful as the number of listed companies grows.

Market experts said more IPOs and a new index can help make the bourse attractive to investors, including foreign financial institutions or FIIs, seeking to capitalize on the growth opportunity provided by China's innovative small and medium-sized enterprises.

In June, seven companies made IPOs on the BSE, up from four in May and one in April, according to data compiled by market tracker Wind Info.

The bourse accepted 92 IPO applications in June, compared with 13 in May and four in April, suggesting IPO processing of the BSE has accelerated.

As of Tuesday, the BSE had 100 listed companies, 105 IPO applications under review and more than 5 million qualified investors. Three qualified foreign institutional investors and two renminbi qualified foreign institutional investors have participated in BSE trading, according to the exchange.

Long Haiyang, head of the executive office of the BSE, said the speed with which companies can list will significantly increase in the coming months compared with the first half of the year. He attributed his assertion to two factors: the number of IPO applicants is growing and the frequency of IPO applications is also rising.

As the number of listed companies increases, the BSE will publish an index tracking market performance of such companies at an appropriate time and encourage market participants to develop investment products based on the index, Long said.

The number of investors will further rise as more companies get listed, Long said, adding that the exchange will facilitate the participation of foreign investors by enriching the investment tools and trading strategies available. The BSE will also explore whether or not to introduce margin trading.

The bourse will also align itself with the national policy to further open up China's capital markets and constantly improve market services, he said.

Liu Yu-Jane, a professor of finance with Peking University's Guanghua School of Management, said the BSE can consider encouraging the launch of exchange-traded funds that track its indexes as such ETFs will attract FIIs.

ETFs, Liu said, are expected to offer ample market liquidity and help avoid the possible entry barriers that FIIs with large fund scales may face in investing in Beijing-listed small-cap companies.

Liu said the proposed BSE index can be heavy with leading innovative SMEs, which will reflect the characteristics of the exchange and distinguish itself from the Shanghai and Shenzhen bourses.

Market mavens said the BSE's efforts to brighten its profile follow overseas investors' heightened interest in Chinese stocks as the nation's economy recovers with stepped-up macro policy support and better containment of the COVID-19.

Factory activity in China sped up in June. The Caixin China General Manufacturing Purchasing Managers' Index rose to 51.7 in June, up from 48.1 in May, marking the highest reading for 13 months.

The easing of regional COVID-19 containment measures contributed to the recovery, Caixin media group said on Friday.

The benchmark CSI 300 Index edged down by 0.41 percent to close at 4466.72 points on Friday, after rising by 9.62 percent in June.

Last month, northbound trading of stock connect programs between the Chinese mainland and Hong Kong exchanges saw net capital worth 72.96 billion yuan ($10.89 billion) flow into A shares, the third-highest single-month inflow on record, according to Wind Info.

Du Juan contributed to this story.