Establishment of the Beijing Stock Exchange

Weekly Events

The Beijing Stock Exchange has landed, creating a main position for serving innovative small and medium-sized enterprises. The goal is to cultivate a group of specialized, special and new small and medium-sized enterprises, and form a benign market ecology with high enthusiasm for innovation and entrepreneurship, active participation of qualified investors, and intermediaries returning to their duties.

Weekly Thoughts

The Shanghai and Shenzhen Stock Exchanges have strict regulations on the issuance of new shares by enterprises, especially in terms of profitability and scale, which makes it difficult for small and medium-sized enterprises that accommodate 70% of the employed population to obtain direct financing, and it is difficult for investors investing in small and medium-sized enterprises to exit. It severely limits the development of small and medium-sized enterprises and the enthusiasm of investors. The significance of the establishment of the Beijing Stock Exchange is to smooth the direct financing channels for small and medium-sized enterprises and the exit channels for investors (shareholders).

When shareholders or investors invest in an enterprise, there are two parts to the income they can obtain: one is dividends, and the other is equity transfer. For small and medium-sized enterprises, profitability is weak and dividends are minimal. The maximum income shareholders can obtain is equity transfer, and the value of equity transfer = stock price × number of shares held. When there is no public trading market, stock price = company net assets / quantity. With a trading market, the value of the company is measured by market capitalization, and the subjective expectations of market traders cause stock prices to fluctuate around the company’s value. Even under the registration system, companies in the domestic public market are checked at every level by securities firms, stock exchanges, the China Securities Regulatory Commission, and local governments. The quality of public companies is relatively high, and companies that issue shares publicly generally can obtain a higher premium. Shareholders or investors can often obtain greater returns by selling equity. The establishment of the Beijing Stock Exchange may not necessarily solve the problems faced by small and medium-sized enterprises immediately, but it can also bring a glimmer of hope to investors and entrepreneurs.

Weekly Market

Period: 2021-08-30———2021-09-05

This week’s review: The Shanghai market was strong and the Shenzhen market was weak this week. The top three wind industry gainers were oil and gas, coal, and electric power; the top three losers were semiconductors, fine chemicals, and biotechnology. The top three wind concept gainers were coal power, wind power, and large infrastructure; the top three losers were photovoltaic inverters, semiconductor equipment, and lithium battery anodes.

Market (%)	Index	This Week
Shanghai Composite Index	3581.73	1.69
Shenzhen Component Index	14179.86	-1.78
ChiNext Index	3102.14	-1.17
STAR 50	1400.89	-5.37
Hang Seng Index	25901.99	1.95
HSCEI	1124.07	4.12
Hang Seng HK Chinese Companies	3998.59	4.34
Dow Jones Index	35369.09	-0.24
Nasdaq	15363.52	1.55
S&P 500 Index	4535.43	0.58

Market (CNY, Billion)	This Week	Previous Week	2 Weeks Ago	3 Weeks Ago
Shanghai Stock Connect	175.42
Shenzhen Stock Connect	103.85
Hong Kong Stock Connect	-98.07

Positions

Code	Name	Dynamics of this Period
F001475	E Fund National Defense Industry	Flat
F110005	E Fund Active Growth Hybrid	Flat
F003834	Huaxia Energy Innovation	Flat
F002083	Xinhua Xin Dongli Flexible Allocation Hybrid A	Flat
F519704	BOCOM Advanced Manufacturing Hybrid	Flat
F519918	Huaxia Xinghe Hybrid	Flat
F011612	Huaxia STAR Market 50 ETF Feeder A	Flat
LKCO	Luokung Technology	Flat