Why China’s smallest stock exchange is suddenly seeing the most IPO interest

Why China’s smallest stock exchange is suddenly seeing the most IPO interest

The Beijing Stock Exchange, long regarded as a minor player in China’s financial markets, is rapidly gaining traction among tech startups and small firms, surpassing Shanghai and Shenzhen in initial public offering (IPO) applications for 2025. According to Wind data, the exchange has received 113 applications this year—more than China’s two dominant mainland bourses combined—fuelled by looser listing requirements and a surge of investor interest in domestic small-cap technology stocks, the Financial Times reported.

From ‘propaganda’ to serious player

Launched in 2021 by President Xi Jinping as a venue to support innovation-driven small and medium-sized enterprises (SMEs), the Beijing exchange struggled initially with poor liquidity and limited listings. For years, it was treated as an afterthought or even a political gesture. However, recent gains in its BSE 50 index—up 37.6% this year—have reshaped market perceptions, especially in contrast to the CSI 300, which has risen just 2.5%.

“People now take it more seriously. It’s no longer just propaganda or a pet project by the leaders,” said Dragon Tang, a finance professor at the University of Hong Kong.

AI and deep tech drive resurgence

The revival has been powered in part by investor excitement around Chinese microcap technology firms following the AI breakthrough by DeepSeek. The CSI 2000 index, which tracks small-cap firms, has climbed 17.6% this year, signalling a broader appetite for bottom-up tech stories in fields like robotics, automation, and hard tech.

Emily Dong of Conning Asia Pacific noted the exchange functions “like venture capital in the secondary market,” offering access to high-risk, early-stage innovation. Many firms listing here remain unprofitable but offer strategic value to China's push for supply chain resilience and technological self-reliance.

Beijing's structural advantage and policy support

The exchange’s looser IPO rules, minimal profitability thresholds, and simplified procedures have made it a compelling choice for startups. Law professor Angela Zhang described it as “a kind of incubator for Chinese start-ups,” especially those targeting domestic customers or lacking access to offshore capital due to China’s tight capital controls.

The exchange is increasingly favoured by semiconductor and AI companies that have already raised capital at high valuations in private markets, making Hong Kong a less attractive option.

Still a long way to go

Despite the flood of IPO applications, only six companies have actually listed on the exchange this year. Analysts point to lingering issues like liquidity, though there are signs of improvement. The exchange’s average price-to-earnings (P/E) ratio was 51 in June—nearly double that of the S&P 500—highlighting the speculative fervour but also underscoring investor confidence.

Companies already listed include Jinbo Bio-Pharmaceutical, BTR New Material Group, Sugon Data Energy, and Jilin Tangu Carbon Fiber, serving major clients like Huawei, Cambricon Technologies, and SK Innovation.

Other exchanges adapt, but Beijing gains ground

The surge in IPO activity is prompting competitive responses. The Shanghai exchange has introduced a new “sci-tech growth tier” within its STAR Market aimed at lowering barriers for tech firms. Still, analysts say Beijing holds key advantages.

“In Beijing you have this ecosystem of research, policy information, finance,” said Yuhao Yang of China Policy. Kenny Ng of Everbright Securities added that liquidity has improved and the exchange’s appeal is “growing and growing.”

As China prioritizes domestic tech resilience and fosters its “little giants,” the Beijing Stock Exchange appears to be evolving from an overlooked pilot into a serious financial engine for innovation.