Inside the Shanghai Stock Exchange Photos: VCG

TheMKsports Nasdaq-style sci-tech innovation board of the Shanghai Stock Exchange, known as the STAR Market, will mark its fifth anniversary on Thursday. The board will continue to play an important role in deepening reforms in China's capital market and advancing the innovative transformation of the economy.

On June 13, 2019, China inaugurated the sci-tech innovation board, a milestone in the country's capital market reform. As of the end of May, 572 companies had been listed on the board, and its capitalization stood at 5.7 trillion yuan ($785.8 billion), according to financial information provider Wind.

As the board is designed to support companies in the high-tech and strategic emerging fields, STAR-listed companies mainly hail from such industries as next-generation information technology, high-end equipment production and biopharmaceuticals.

STAR-listed companies have gradually covered entire industrial chains like semiconductors, new materials and new energy, achieving coordinated development, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times.

Those companies showed a firm commitment to promoting innovation, with the compound annual growth rate (CAGR) of their investment in research and development (R&D) up by 25.29 percent over a three-year span before and after their IPOs. 

Big investments in R&D paid off on the business side. The CAGR of those companies' profit was 37.11 percent over the same period, according to calculations by UBS Securities.

"The STAR Market has supported the development of more than 500 technology enterprises over the past five years, with notable achievements in nurturing innovative firms and serving the real economy. Overall, we have seen a notable increase in these firms' R&D investments and profits after their IPOs, showing how the board empowers tech firms," Qian Yujun, chairman of UBS Securities, said in a press release sent to the Global Times on Wednesday.

From being a test field to reaching a new height, the development of the STAR Market has been significant for the growth of China's capital market, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.

Over the past five years, the STAR Market has played a demonstration role in the in-depth reform of other boards - for example, the registration-based IPO mechanism in the ChiNext board of the Shenzhen Stock Exchange and main boards, as well as the setting up of the Beijing Stock Exchange - and injected new vitality into China's capital market.

The STAR Market's multiple innovations in trading, pricing and market-maker trading offer valuable experience for the improvement of China's capital market mechanism, Yang said, noting that the introduction of market-maker trading will especially drive the growth of the capital market.

Led by the STAR Market, China's capital market has entered a new development stage, Xi said, expressing confidence in the long-term prospects of the capital market.

"China's sound and stable economy provides a good environment for the development of companies. The long-term investment value of China's capital market will gradually rise, despite temporary challenges," Xi said.

Yang called for confidence and patience for a rebound in China's stock market. A-share valuations are near historical lows - for example, the price-to-earnings ratio of the CSI 300 is less than 12 times, far below the historical high of 45 times.

This year, Chinese financial regulators have adopted policies to promote opening-up in the financial sector and capital market reforms, helping build the country into a financial powerhouse.

In April, the State Council, the cabinet, released a new guideline on strengthening regulations, forestalling risks and promoting the high-quality development of the capital market, which will provide strong guarantees for the healthy, long-term development of the country's capital market.

Under the new guideline, the China Securities Regulatory Commission has taken steps to improve the ecosystem of the country's capital market. It has also announced five measures to boost cooperation between capital markets in the Chinese mainland and Hong Kong, a new opening-up model that features multiple channels and mechanisms.

Policies to deepen reforms and expand opening-up in the financial market as well as a stable economic recovery are attracting more international players to China's stock market.

In March, Standard Chartered Securities (China) officially opened for business. On Tuesday, Citi said that it is pursuing the establishment of a wholly owned securities and futures company in the Chinese mainland, after the sale of its consumer wealth business in the mainland to HSBC.