September 2nd marked the fifth anniversary of the Beijing Stock Exchange's (BSE) official announcement. As the primary capital market platform dedicated to serving innovative small and medium-sized enterprises (SMEs), the BSE's development achievements and the effectiveness of its niche market functions have drawn significant market attention.

The quality of listed companies is the cornerstone of an exchange's sustainable development. As of September 1st, the BSE boasted 339 listed companies, more than four times the number at its inception, with total market capitalization expanding from less than 300 billion yuan to approximately 850 billion yuan. Latest interim report data shows that over 80% of BSE-listed companies were profitable in the first half of this year.

"In the past five years, the BSE has delivered a report card characterized by both quantitative growth and qualitative improvement," said Tian Xuan, Dean of Peking University's Guanghua School of Management and a top professor at the university. "The number of listed companies and total market value have grown significantly. Among the current 300-plus firms, over 80% are SMEs and nearly 90% are private enterprises, fully reflecting its original functional positioning."

"The pace of expansion over the past five years has broadly aligned with phased market expectations," noted He Yu, Deputy General Manager of Northeast Securities' Investment Banking Division. He highlighted that the BSE's high-quality expansion is not merely about quantity, but relies on the reservoir of quality SME resources nurtured by the National Equities Exchange and Quotations (NEEQ) system, steadily onboarding companies that fit its positioning for a "steady and progressive" expansion.

Broad participation from transactional investors is also crucial for an exchange's development. The latest data shows that the BSE now has over 11 million qualified investors, nearly triple the number at its launch. More than 3,000 public funds are participating in market trading, with institutional investors' share of trading volume rising from 9% at inception to 24%.

As of September 1st, the BSE market hosts 339 listed companies, an increase of more than threefold from the 81 firms at the start of trading in November 2021. Total share capital stands at 46.866 billion shares, with a total market value of 854.582 billion yuan. In terms of profitability, interim data reveals that all 339 companies collectively generated 138.566 billion yuan in revenue, with average revenue of 409 million yuan, a year-on-year growth of 15.11%. Combined net profit reached 11.783 billion yuan, with an average of 34.7592 million yuan per company, up 17.58% year-on-year. Of these, 282 firms were profitable, maintaining an overall profitability rate above 80%.

Private SMEs, which form the backbone of the BSE, are demonstrating robust development momentum. The exchange hosts 258 SMEs and 293 private enterprises, each accounting for over 70% of the total. In the first half of the year, private SMEs achieved a revenue growth rate of 14.92%, up 7.38 percentage points year-on-year.

Multiple market observers believe that the BSE's current market size and expansion speed are in line with expectations. "Early expansion was relatively slow, but it has accelerated notably this year, with over 50 new companies added and IPO review cycles further shortened," said Tian Xuan. "The scale expansion has balanced the pace of new listings against market absorption capacity, avoiding liquidity overdraft issues."

Data shows that of the 102 new A-share listings in the first eight months of the year, half (53) chose the BSE. He Yu added that in terms of quality, the BSE has cultivated a number of industry-leading enterprises concentrated in advanced manufacturing, new energy, new materials, and semiconductors. The exchange has also provided a clear upward path for NEEQ-listed companies.

Zhu Jieyu, Chief Analyst for the BSE at Soochow Securities, noted that the BSE's total number of companies and market value have grown significantly since its launch, marking a transition from a fledgling market to a mature capital market for SMEs. "In terms of supply structure, BSE companies originate from the NEEQ's innovation tier, truly practicing the gradient cultivation logic of 'nurture one, mature one, list one.' The supply of listed companies has ample room for future expansion."

As the market scales up, the BSE's participant base is diversifying, with a steadily growing investor population. From roughly 4 million qualified investors at inception, the number has increased by about 7 million over five years. Institutional trading share has climbed from 9% to 24%. With the gradual improvement in market size and investor numbers, the liquidity issues that once plagued the BSE are also easing. This year, the average daily trading value on the BSE has exceeded 20 billion yuan, with the secondary market's average P/E ratio stable between 30 and 40 times. In late July, the BSE's public offering products saw expansion, with the first eight three-month holding period theme funds officially filed, involving fund managers including China Asset Management, China Universal, E Fund, and Southern Fund.

"The liquidity challenges that long constrained the BSE have been temporarily alleviated," Tian Xuan believes, citing the implementation of market maker systems and securities lending and borrowing tools, which have significantly boosted activity among BSE-listed companies.

The BSE's institutional achievements over the past five years have also drawn attention. In September 2021, when the BSE was born, the capital market's registration system reform was in a critical phase of transitioning from pilot to full implementation. Tian Xuan noted that the multi-tiered capital market structure is now largely established, with clear positioning across the three major boards. The BSE is specifically oriented toward innovative SMEs, providing precise financing services for "little giants" in specialized and sophisticated industries.

He also underscored the BSE's integrated linkage with the NEEQ as a core aspect of its institutional reform. Currently, a positive cycle of "basic tier standard norms - innovation tier deep incubation - BSE accelerated listing" has formed, along with a more resilient direct financing ecosystem for SMEs.

Zhu Jieyu has divided the BSE's five-year development into three key phases. The first is the 2021 launch period, during which the exchange was inaugurated, the first 81 companies were listed, and basic trading, listing, and financing systems were initially established. The second is the institutional improvement period, concentrated from 2022 to 2024, when the BSE continuously optimized trading mechanisms and investor suitability, launched market maker pilots, and gradually enriched its product system.

"Since last year, the BSE has entered its third phase of quality improvement and upgrading, with the institutional system fully transitioning to formal implementation," she noted. Specific measures include revised trading rules aligned with the Shanghai and Shenzhen markets, the first private bond listings, and the unified switch to the 920 stock code segment.

Most recently, the BSE's first simplified procedure private placement was completed. Haineng Technology (920476.BJ) announced in early August that its simplified placement was done, issuing 4.4059 million shares to raise nearly 89 million yuan. Following the major exchanges' introduction of a package of optimized refinancing measures in February this year, a wave of BSE companies have actively tried the simplified refinancing process.

"Simplified procedure refinancing has been a major highlight for the BSE market this year, attracting a certain number of institutional investors," said Zhu Weiyi, Vice President of Huaxing Certified Public Accountants. He Yu added that the successful launch of simplified refinancing and private bond issuance marks the BSE's evolution from a purely equity financing market to a multi-tiered market with coordinated equity and debt development.

As the BSE marks its fifth anniversary and the "Deep Reform 19 Measures" also reach their third year, market expectations for further deepened reforms run high. Interviews with multiple market participants reveal that expected reforms include: enhancing investment and financing reforms, pursuing further high-quality expansion, improving market liquidity, accelerating the launch of three-month holding period funds, introducing index-linked products, and market capitalization-based IPO lotteries.

On balancing the investment and financing ends, Tian Xuan believes the financing side should control pace and improve quality, matching differentiated financing instruments to SME growth stages and industry characteristics, while streamlining the full-process listing convenience and strictly enforcing listing quality. The investment side should expand increments and optimize existing stock, strengthening the diversified institutional investor base, guiding long-term capital such as public funds, social security, and QFII into the market, and enriching diverse trading products including index products.

"Compared with the financing end, more investment-side measures are still in preparation at the BSE. There is anticipation that the exchange will further attract incremental capital and enhance liquidity," said Yu Wei, an expert with the China Xiaokang Society's Economic Development Research Committee.

High-quality expansion remains a key near-term task, Zhu Weiyi said. "Only by expanding to a certain scale with a sufficiently large pool can more long-term capital be attracted. However, the secondary market's absorptive capacity must also be considered during expansion." He Yu believes the BSE's further expansion has a solid foundation: "With only 339 listed companies compared to over 5,700 NEEQ-listed companies, there is still significant reserve space."