With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises is Released to Actively Explore the Way of Listing for China’s Potential Sci-tech Enterprises (I)

Release time：2021-07-22    

Today (July 22^nd 2021), The Science and Technology Innovation Board (the STAR Market), the “experimental plot” of the capital market reform, celebrated its 2^nd anniversary. Over the two years, the STAR Market has gone through sharp reform and achieved fruitful results, including the dynamic registration system and a second prime. The many innovative and vigorous results represent the determination and efficacy of technological innovation in the capital market. To further accelerate technological innovation and constantly deepen the system reform in the capital market, on July 18^th 2021, the theme forum of “2021 Ways of Listing for China’s Sci-tech Enterprises” was successfully held, gathering distinguished guests from government units, university thinktanks, sci-tech enterprises, industrial parks and press media to have in-depth discussions on the achievements and experience acquired by the reform of the pilot registration system on the STAR Market in its two years and to actively explore the ways of listing for China’s potential sci-tech enterprises.

It is particularly noteworthy that With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises led by Professor Jun Qian, Executive Dean of FISF, was initially released. Based on the analysis framework of relevant fields of company finance, capital markets and company governance and in combination of the features of China’s capital market and the reform of the registration system, the scheme screens and excavates potential sci-tech enterprises through rigorous statistics and econometric analysis and makes an overall assessment on the gap between these potential sci-tech enterprises with those already listed on the STAR Market so that a relatively comprehensive evaluation result and improvement direction can be offered for the future development and strength increase of these potential enterprises.

Present on the forum were Mr. Guangshao Tu, Chairman of FISF International Advisory Committee, Distinguished Professor of Finance, Former Member of the Standing Committee of Shanghai Municipal Party Committee, Executive Vice Mayer, and Former Vice Chairman and General Manager of China Investment Corporation; Mr. Jun Li, Deputy Director of Shanghai Municipal Financial Regulatory Bureau (Shanghai Financial Work Bureau), and Mr. Zhenghong Zhu, Former Director of Shanghai Technology Innovation Center, Chairman of Shanghai Technology Exchange and Professor-level Engineer, and other distinguished guests. They focused and gave splendid speeches on the three topics of “the STAR Market and institutional supply in the capital market”, “bringing the STAR Market as the experimental plot into play and promoting high-quality development of sci-tech enterprises” and “building a high-growth habitat for sci-tech enterprises and constructing the cultivation system of sci-tech enterprises”, guiding and promoting the high-quality development of the STAR Market by sharing and spreading their opinions. Professor Jun Qian, Executive Dean of FISF, released With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises and interpreted sci-tech enterprise cases. In the round-table dialogue, Mr. Yongwei Li, Co-head of Huatai United Securities Shanghai Department, Mr. Le Lin, Founder and CEO of Shanghai Neng Lian Technology Co., Ltd (Neng Lian Technology), Mr. Yuanjie Xu, Senior Internet Marketing Expert, Former CEO of China.com and Former COO of Baihe.com, and other guests conducted fierce discussion on the topic of “boosting China’s technology development with the STAR Market - the new ecosystem in the capital market under the reform of the registration system”. Professor Huasheng Gao, Deputy Dean of Faculty and Research, hosted the round-table dialogue.

Guests attending the forum also included relevant leaders of Shanghai Lingang New Area Economic Development Co., Ltd., Suzhou Industrial Park, Suzhou Hi-tech District Industrial Development Zone, Changzhou National Hi-tech District Industrial Development Zone, Management Committee of Changxing Economic and Technological Development Zone, Nantong Suxitong Science and Technology Industrial Park, South Taihu New Area of Huzhou, Shanghai Office of Huzhou Nanxun District Government and Kunshan China Merchants Group of Nantong Haimen District.

Mr. Guangshao Tu first delivered his speech entitled “the STAR Market and institutional supply in the capital market”. He analyzed the three aspects of the major significance, the need to keep pace with the times and the demand for systematic advance of the institutional supply in the capital market and introduced the overall innovation progress of the institutional supply in the capital market. He emphasized that the STAR Market, as a specific product of the institutional supply in the capital market, focuses on the hard&core technology industry that urgently needs to be developed in China and prominently drives and guides the next step of economic development and industrial structure upgrading in China. During the forum, Tu spoke highly of With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises, pointing out that a series of specific preparations are needed for the development of the STAR Market, and that the assessment and evaluation system of the enterprises planning to be listed will assist sci-tech enterprises to have a clearer targeting and thus make better preparations for their listing on the STAR Market. This can further improve the quality of enterprises listed on the STAR Market and promote the high-efficiency and high-quality development of the STAR Market.

Mr. Jun Li indicated in his speech of “bringing the STAR Market as the experimental plot into play and promoting high-quality development of sci-tech enterprises” that during the two years since the launch of the STAR Market, Shanghai Municipal Financial Regulatory Bureau focused on the six main fields of the STAR Market and three leading industries to enhance business incubation and cultivation, and has achieved remarkable results in four aspects. Firstly, the multilevel working mechanism of departmental linkage and urban coordination has been preliminarily established; secondly, the two libraries of sci-tech enterprises and policy instruments have basically taken shape and the multilayer, multi-class “Light of Pujiang River” technology enterprise library has also been formed; thirdly, the service system for the three key links and the whole life cycle of enterprise growth has also come into being; and fourth, the relevant supporting environment including judicial guarantee has been continually perfected. Li said With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises released by FISF is a practical measure for universities to serve the construction and development of the technology innovation center. He wished FISF to tightly seize the mechanical opportunities offered by the registration system on the STAR Market, go deeper in studying the development law of sci-tech enterprises and the demands of enterprises for financial services, and, by taking this forum as a chance, build a platform that offers high-quality services for the vast sci-tech enterprises.

In his speech of “building a high-growth habitat for sci-tech enterprises and constructing the cultivation system of sci-tech enterprises”, Mr. Zhenghong Zhu elaborated on the critical methods of building a high-growth habitat for sci-tech enterprises in Shanghai and provided some innovative ideas for the construction of the sci-tech enterprise cultivation system in the Yangtze River Delta and even the whole nation. According to research data, by 2020 there have been 191 incubators, 182 maker spaces, 108 start-up nurseries, 13 start-up accelerators and 13 university science parks in Shanghai as start-up carriers, incubating 21250 enterprises with 4076 having already graduated. It is widely recognized that the internal driving forces of the high growth of enterprises are core teams, core technology and innovative ideas, all the three of which are indispensable. Then what are the external environmental factors for the high growth of enterprises? Mr. Zhu believed that resources, policies, services and cultures are the four most essential external environmental factors to boost high growth of enterprises. Through the latest statistics and vivid cases, he specifically analyzed a series of policies implemented in Shanghai for the construction of the high-growth habitat for sci-tech enterprises such as the sailing plan, recognition of hi-tech enterprises and venture capital linkage, as well as the featured professional services like three-tier coaching echelon, innovation and entrepreneurship competitions, and “investment plus incubation”. At last, Zhu concluded that the cultivation system of sci-tech enterprises in Shanghai has three features of high coordination, linkage realization and government promotion.

As the “key role” at this forum, Professor Jun Qian released an in-depth interpretation of With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises. To further enrich the reserve resources of listed enterprises on markets with the registration system such as the STAR Market and the Second-board Market and to screen and explore potential high-quality sci-tech enterprises, FISF cooperates with relevant units and jointly launched the in-depth study and overall analysis on With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises. The scheme first selects enterprises that have already met or can grow within a short time to meet the basic listing requirements according to the six fields and five sets of criteria for listing on the STAR Market. Based on this, it then further targets the enterprises already listed on the STAR Market and, in combination of the financial performance, company governance, R&D and innovation capabilities and idiosyncratic risks of the enterprises, selects an already-listed enterprise with the closest comprehensive performance for each enterprise to be assessed by means of propensity score matching. In the end, the assessment scheme is based on two parts: first is the quantitative analysis according to the five sets of criteria for listing and the second is the four levels from A to D summarized through the score gap between the enterprise to be assessed and the already-listed enterprise with the closest performance, which is an assessment system built on the basis of standardized data. In addition, project teams may also generate more comprehensive and thorough assessment reports depending on personalized data offered by certain enterprises and special industries (including interviews with senior management of enterprises or with entrepreneurial teams).

Professor Jun Qian made reference to the fact that China’s capital market has gone through 30 years’ trials and hardships and now further developing Chinese stock market is one of the most significant missions of China’s financial system. Based on research data, Professor Qian compared the long-term performance of the major stock indexes in multiple regions at home and abroad within the 29 years. As is shown by the data, from 1992 to the end of 2020, the cumulative rate of return (inflation excluded) of Shanghai Composite Index in the 29 years is 1.46, and its annual net rate of return (inflation excluded) is around 1.3%. The numbers correspond to the Nikkei Stock Average with inflation excluded while lower than the stock indexes in other emerging markets and mature markets. On the other hand, during the 19 years from 2000 to 2018, the cumulative rate of return (inflation excluded) of Chinese enterprises listed abroad (mainly those listed in Hong Kong China and the US) has reached 3.5, which is way ahead of most stock markets worldwide in the corresponding period. The long-term performance of A-share listed companies in China is a bit disappointing, thus many Chinese sci-tech companies and international giants in emerging industries choose to list abroad. With structural problems of listing and delisting mechanisms in China’s stock market, the launch of the STAR Market and the pilot registration system is critical to the development of China’s stock market. Qian stressed that With STAR Market as Standard: Rating Scheme of Potential Sci-tech Enterprises offers a method system of assessing the strength of non-listing sci-tech enterprises, the potential sci-tech enterprise reserve worthy of market attention and a new idea to construct the overall assessment index system. Recently FISF will work with cooperating units and officially release the first potential sci-tech enterprise rating report in China.