“Innovation” and “growth” are keywords of the achievements in the reform

Distinct innovation

Over the past two years, 355 new companies have been listed on the ChiNext Board under the registration-based IPO system, with total market value of over CNY 2.6 trillion, and over CNY 320 billion raised in IPOs. Nearly ninety percent of those companies have become high-tech companies, and nearly sixty percent enterprises in strategic emerging industries. Most of the newly listed companies are new-generation IT, high-end equipment manufacturing, energy conservation & environmental protection, new materials, and life & health. There is a clear trend toward cluster development. A fleet of companies with core technologies and innovation capability such as EMPYREAN (301269) and CNGR (300919) have been listed. The average R&D spending of the ChiNext Board-listed companies in 2021 was CNY 120 million, up nearly 30% year on year, and they had about 160,000 core patented technologies relating to main businesses and over 450,000 R&D staff.

Prominent growth

The ChiNext Board has a total of 1,175 listed companies. Their average operating revenue in 2021 was nearly CNY 2.4 billion and average net profit CNY 173 million, up 24% and 20% year on year. Over fifty percent of the companies that got listed under the registration-based IPO system recorded a growth in both operating income and net profit. Forty-seven companies saw a net profit growth of over 50%, demonstrating strong profitability and growth potential.

Improving pricing capability

The total market value of the ChiNext Board-listed companies surpasses CNY 12 trillion. Their average daily transaction volume in the past two years is CNY 216.6 billion, and annual transaction volume in 2021 was CNY 54 trillion. The cumulative return of the ChiNext Index was 185% and recorded one of the fastest growths among major market indexes in the world. The ChiNext Index has become an important target for domestic and foreign investors to allocate A shares. After the reform, the new share price discovery efficiency and activity have increased significantly and market resilience has improved. It has become one of the most active markets in the world.

A step closer toward the goal of a quality innovation capital center

First,the ChiNext Board under the registration-based IPO system has become more inclusive. The ChiNext Board has accepted IPO applications from 1,017 companies from over 50 industries, with 2.1 applications accepted on each trading day on average, the highest review efficiency on the market.Second,continuous financing capability has further improved. So far, 319 companies have completed refinancing, with a cumulative financing amount of nearly CNY 340 billion; 36 companies have completed restructuring, with a transaction amount of nearly CNY 40 billion; industry integration and M&A have become the mainstream, with a proportion up to 67%. Listed companies have served as the “locomotive” and facilitated the integration of industrial chains and supply chains.Third,the ChiNext Board has mobilized and guided social capital to concentrate in innovative areas. That has effectively motivated institutions in PEs, VCs, etc. to invest in high-tech companies and support technological innovation, facilitating the sound circulation of technology, industries and capital and contributing to the building of a quality innovation capital ecosystem that is full of vigor.Fourth,medium and long-term capital has maintained growth. The ChiNext Board has over 50 million investors, of whom institutional investors account for over fifty percent, while foreign investors are increasing, and the proportion of circulation market value held is 5.7%. There are 62 fund products developed based on the ChiNext Board index series, with a scale of over CNY 60 billion. Medium and long-term capital is continuously attracted to allocate in quality innovation-oriented enterprises.

A combination of measures are adopted to ensure the high-quality operation of the registration-based IPO system of the ChiNext Board

SZSE has improved review quality and efficiency to build an inclusive and efficient market system.First,the ChiNext Board has set diversified listing standards, simplified issue terms, strictly implemented the “negative list”, conveyed “clear orientation” and built the comprehensive and inclusive market system integrating “Main Board + ChiNext Board”.Second,with information disclosure at its core, the ChiNext Board has optimized review procedures and increased the accuracy and effectiveness of inquiries, to improve review quality and efficiency.Third,the ChiNext Board has strengthened review as a service. We have sought advice from the market on how to implement review and made the review service zone available 24/7. We have answered more than 10,000 review service calls and received over 500 on-site and video communication meetings to ensure sufficient communication to the best of ability. We have practiced the review principles of “being open-minded, transparent, honest and impartial”.

SZSE has improved the quality of listed companies and refined the mechanisms and systems aimed to support innovation-oriented enterprises achieving sustained growth.The existing business market has implemented the registration-based IPO system synchronously and optimized the policies and regulations on M&A, restructuring and refinancing with 17 companies tried speedy micro refinancing. The registration takes effect as fast as 6 working days, and within 9 working days in average. A more flexible stock ownership incentive system and employee stock ownership plans have been implemented to support the high-quality development of listed companies.

SZSE has improved the regular delisting system to help form a market ecosystem featuring orderly entry & exit and survival of the fittest.We have reformed the ChiNext Board delisting mechanism and standardized the implementation procedures and information disclosure for matters like bankruptcy and restructuring of listed companies. A market-based, regular and diversified exit mechanism has taken an initial shape. A total of 13 companies have been delisted since the implementation of the registration-based IPO system, demonstrating its role in improving market function of “survival of the fittest”.

With institutional building at the core, SZSE has enriched and optimized the precise and efficient self-discipline regulation system.First,the action to establish new rules, modify outdated rules, abolish conflicting rules, and interpret relevant rules according to new laws concerning the self-discipline regulation rules of the ChiNext Board has been completed. The number of rules has been reduced, and a system of rules with listing rule at its core, standard operating guidelines and industry and special business information disclosure guidelines as its main trunk and business guides as its supplement has been formed.Second,we have improved the long-effect regulation mechanism of the ChiNext Board, deepened “scientific regulation, classified regulation, specialized regulation and continuous regulation”, and strengthened oversight of compliance with information disclosure and corporate governance. Meanwhile, we have enhanced the combination of information disclosure with transaction regulation, ensured intermediaries fulfill their responsibilities, guided market entities to perform their duties, and helped listed companies grow bigger and stronger.

Embark on a new journey to build a quality innovation capital center and world-class exchange

At a new starting point, SZSE will embark on a new journey. We will follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implement in depth the decisions and plans of the CPC Central Committee and the State Council on financial work, and actively serve national strategies and economic and social development. We will plan for the development of the exchange under the 14th Five-Year Plan and Long-Range Objectives through the Year 2035. Besides, with consolidating the achievements in the registration-based IPO system reform of the ChiNext Board and steadily promoting the adoption of the registration-based stock issuance system across the board as the leverage, we will push for the implementation of the “Eight Building” strategic measures.

First,to build an inclusive and efficient innovation supporting market system. With a focus on key areas such as advanced manufacturing, digital economy, green and low carbon, we will strive to form a diversified and inclusive market access system and expand bond financing channels in the field of technological innovation.Second,to build a market mechanism that supports innovation-oriented enterprisesachieving sustained growth. We will improve the policies aimed to support the high-quality development of listed companies, optimize the price discovery mechanism and enrich investment and financing products, to create an environment that attracts and can retain medium and long-term funds.Third,to build a market ecosystem featuring orderly entry & exit and survival of the fittest. We will delist all companies that should be delisted and make sure the delisting procedures are streamlined and easy to operate to facilitate the sound circulation of innovation capital.Fourth,to build an institutional high-standard two-way opening model. We will deepen capital cooperation between Shenzhen and Hong Kong and promote the domestic and international two-way flows of innovation capital.Fifth,to build a precise and efficient self-discipline regulation system. We will advocate the standard operation of innovation-oriented enterprises and guide the orderly development of innovation capital.Sixth,to build a comprehensive and effective risk control system. We will continue to improve the ability to prevent all kinds of risks and hold fast to the bottom line of zerosystemic risk.Seventh,to builda world-leading digitalization system. We will step up efforts in the building of digital infrastructure and forge a digital-smart exchange in all respects.Eighth,to build a modern exchange governance system with Chinese characteristics. We will adhere to Party leadership in all respects, continue to strengthen the atmosphere offull and strict Party self-governance, refine the internal governance structure, and follow the development path toward a modern exchange with Chinese characteristics.

SZSE will follow the overall plan of CSRC, apply the new development philosophy in full, in the right way, and in all fields of endeavor, and actively serve the formation of a new development pattern and the goal of high-quality development. We will gather innovation capital, energize growth drive, spare no effort to build a quality innovation capital center and world-class exchange, and further improve the capability of the capital market to serve the real economy.