Capital Market Boosts Quality with Key System Innovations
In the first half of 2024, the R&D investment of listed companies exceeded 700 billion yuan; after the release of the "Science and Technology Innovation Board Eight Articles," dozens of Science and Technology Innovation Board listed companies have announced industrial merger and acquisition plans, and the vitality of "hard technology" mergers and acquisitions has burst forth; so far this year, among the newly listed companies in China, the proportion of companies on the Science and Technology Innovation Board, ChiNext, and the Beijing Stock Exchange has exceeded 70%... A set of data has showcased the new highlights of the capital market's reform and development towards the "new" quality improvement.
Good seeds also need fertile soil to grow. The industry expects that regulatory authorities will continue to improve the multi-level capital market system, conduct in-depth research to improve the institutional arrangements for issuance and listing, mergers and acquisitions, venture investment, etc., and continuously enhance the quality and efficiency of the capital market's service to the development of new quality productive forces.
Improving the market system, serving the development of new quality productive forces, the capital market has a lot to do and is also making great efforts, which is mainly reflected in the continuous improvement of the capital market's service coverage and precision.
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At present, ChiNext, the Science and Technology Innovation Board, and the Beijing Stock Exchange are important segments supporting technological innovation: the Science and Technology Innovation Board highlights the "hard technology" characteristics and plays the role of the "experimental field" for capital market reforms; ChiNext focuses on serving high-quality growth-oriented innovative and entrepreneurial enterprises; the Beijing Stock Exchange and the National Equities Exchange and Quotations system together create a main position for serving innovative small and medium-sized enterprises. According to statistics, as of September 19, among the 64 newly added listed companies this year, the proportion of companies listed on the Science and Technology Innovation Board, ChiNext, and the Beijing Stock Exchange has exceeded 70%, and financial resources are further concentrated in the field of new quality productive forces.
"Since the beginning of this year, from the introduction of the new 'Nine National Articles' and the '1+N' policy system of the capital market, to the implementation of the 'Sixteen Articles for Serving Science and Technology Enterprises', and then to the release of the 'Science and Technology Innovation Board Eight Articles'; from setting higher standards for the R&D investment amount, the number of invention patents, and the revenue growth rate of enterprises applying for the Science and Technology Innovation Board, to supporting Science and Technology Innovation Board listed companies to acquire high-quality unprofitable 'hard technology' enterprises, and then to helping traditional industry listed companies transform to new quality productive forces... The coverage and precision of the capital market's service to cultivate and develop new quality productive forces are continuously improving, and capital 'living water' is continuously flowing into the field of new quality productive forces." said Tian Xuan, Dean of the National Finance Research Institute of Tsinghua University.
The policy effects are gradually becoming apparent. Data from the China Securities Regulatory Commission (CSRC) shows that in the first half of this year, the R&D investment of listed companies exceeded 700 billion yuan, with an average R&D intensity of 2.4%, among which more than 2,100 companies' R&D intensity exceeded 5%, promoting the A-share market to create a group of new quality productive force benchmark enterprises with high market recognition, large industry influence, and strong R&D capabilities.
Fuyao Glass has made breakthroughs in the research and development of 5G antenna glass to achieve integrated integration, with the maximum network speed reaching 800 megabits per second; Yutong Bus has broken through key technologies such as low lithium consumption and slow decay of electric cells with long service life, and has taken the lead in promoting a long-life battery system with a service life of 10 years and 1 million kilometers; Hengrui Medicine has launched 16 innovative drugs of the first category... A group of traditional industry enterprises are accelerating towards the "new".
In the future, more capital market reform measures focusing on improving the coverage and precision of serving new quality productive force enterprises are worth looking forward to. He Haifeng, Chief Economist of Guotai Junan, suggested that we should adhere to promoting development and stability through reform, further improve the multi-level capital market system, enhance the coverage and precision of services, and enrich the tools, products, and services of the capital market in a targeted manner. At the same time, carry out a comprehensive evaluation of capital market reforms, and promote the continuous deepening of important system reforms such as the registration system for stock issuance.
Enhance the inclusiveness of the system.The capital market plays a better role in serving the development of new quality productive forces by addressing the issue of inclusive innovation from the perspectives of systems, mechanisms, and concepts, enhancing the inclusiveness of systems, and vigorously promoting key system innovations. Recently, regulatory authorities have proposed a series of measures for enterprises related to new quality productive forces, characterized by large investments, long cycles, and high uncertainty in R&D and commercialization, and have implemented these measures one by one to provide stronger support for the development of new quality productive forces.
Enhance the inclusiveness of systems. The Science and Technology Innovation Board (STIB) has set up a diverse and inclusive set of listing conditions to meet the financing needs of scientific and technological innovation enterprises of different types and stages of development. In particular, the fifth set of listing standards, "market value + R&D," fully accommodates the inherent characteristics of large investments and long cycles in the innovative biopharmaceutical field, further enhancing the adaptability of the capital market to technological innovation enterprises. At present, the R&D results of companies listed under the fifth set of standards on the STIB are accelerating the realization of their achievements, with several companies such as Zhixiang Jintai and DiZhe Pharmaceuticals having approved their self-developed products. The "STIB Eight Measures" released in June this year further emphasized support for high-quality unprofitable technology enterprises with key core technologies, large market potential, and prominent scientific and technological attributes to list on the STIB.
Activate the mergers and acquisitions market. The "STIB Eight Measures" clearly support STIB-listed companies to carry out mergers and acquisitions of upstream and downstream industries, enhance industrial synergy; appropriately increase the valuation tolerance of mergers and acquisitions of STIB-listed companies, and support STIB-listed companies to focus on enhancing their continuous operating capabilities by acquiring high-quality unprofitable "hard technology" enterprises. Within three months of the release of the "STIB Eight Measures," dozens of STIB-listed companies have released industrial merger and acquisition plans, including several major asset reorganizations, and several companies plan to acquire unprofitable assets.
Support enterprises in overseas financing. As of September 19, this year, 38 companies have entered the U.S. stock market, surpassing the 23 companies of the same period last year; 33 companies have entered the Hong Kong Stock Exchange, surpassing the 19 companies of the same period last year. Enterprises in new quality productive force fields such as artificial intelligence, biopharmaceuticals, and smart electric vehicles are gradually becoming an important force in overseas financing.
"Continuous efforts should be made to advance reforms in the areas of listing, equity incentives, mergers and acquisitions, and information disclosure, continuously improving the service efficiency and resource allocation efficiency of the capital market for technology-based enterprises, further improving the service system for strategic emerging industries and high-tech industries, and building a multi-level capital market system with differentiated development, complementary functions, and interconnectivity to better support the formation of new quality productive forces and high-quality economic development," said Yan Xiang, Chief Economist of Huafu Securities.
Strengthen patient capital
To improve the quality and efficiency of serving new quality productive forces, it is necessary to strengthen long-term capital and patient capital. Regulatory authorities are actively creating conditions to attract more medium and long-term funds into the capital market, optimizing support policies around the entire chain of venture capital and private equity investment "raising, investing, managing, and exiting," and guiding better investment in early-stage, small-scale, and hard technology to promote a virtuous cycle of "technology-industry-finance."
Expanding a diverse range of investment entities to provide full-cycle strong support for the development of new quality productive forces. Equity investment funds are an important part of the multi-level capital market. Chen Wenhui, former Vice Chairman of the National Council for Social Security Fund and former Vice Chairman of the China Banking and Insurance Regulatory Commission, believes that China's equity investment funds should be combined with new financial infrastructures such as the STIB, Growth Enterprise Market (GEM), and Beijing Stock Exchange (BSE) to form a "stock loan bond insurance" linkage service system, promoting a virtuous cycle of "technology-industry-finance."
Dai Wensheng, a professor at the School of Finance, Renmin University of China, suggests broadening the channels for equity investment fund sources and encouraging diverse capital to participate in angel investment, venture capital, and private equity investment. Guide various entities such as state-owned enterprises, private enterprises, and foreign-funded enterprises to increase investment efforts and form a multi-level and diversified equity investment market.
Improve the ecosystem and enrich the exit channels for venture capital. Zhou Hanmin, a member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) and former Vice Chairman of the Central Committee of the China Democratic National Construction Association (CDNCA), suggests continuing to deepen the reform of the capital market and the construction of a multi-level capital market to provide multiple choices for venture capital exits and direct financing support for the development of scientific and technological innovation enterprises. Support the innovation and development of the Secondary Market (S Fund) market, improve the business model and operation mechanism, and allow venture capital institutions to exit through the transfer of invested enterprise investment shares, agreement trading, mergers and acquisitions, and physical distribution of stocks, concentrating more resources on technology industries that align with the national strategy.In addition, it is necessary to create a policy environment conducive to the entry of patient capital into the market. Chen Wei, Chairman of Shenzhen Oriental Fortune Capital Management Co., Ltd., suggests constructing a venture investment-friendly development environment; promoting the formation of a multi-level long-term capital supply system including banks, insurance companies, social security, and funds of funds; and guiding and encouraging social capital to participate in venture investment for the long term through measures such as tax incentives.