STAR market Photo:VCG

China's top securities regulator on Wednesday announced new measures to deepen reform of the Nasdaq-style sci-tech innovation board of the Shanghai Stock Exchange, also known as the STAR Market, in a bid to better serve sci-tech innovation and the development of new quality productive forces.

Analysts said the pioneering and leading nature of the reform in the STAR Market underscores the board's crucial role for the world's second-largest economy and its industrial transformation and upgrading. 

They called for strengthening regulation to harness the functions and roles of the capital market and contribute to the building of a country with a strong financial sector.

Sci-tech firms that have made breakthroughs in core technologies in new and emerging industries will have priority to get listed on the STAR Market. A green channel will be established to facilitate the financing and mergers and acquisitions of sci-tech firms that are aiming for breakthroughs in core technologies, according to the China Securities Regulatory Commission (CSRC).

The CSRC vowed to improve the pricing-setting of stock listings. It also strengthened regulations on trading to promote the steady operation of the market while protecting investors with "teeth and horns."

Celebrating its fifth anniversary on June 13, the board is designed to support companies in high-tech and strategic emerging fields, and STAR-listed companies largely come from such industries as next-generation information technology, high-end manufacturing and biopharmaceuticals.

The new reform of the STAR Market serves a pioneer and guidance function for China's capital market, and underscores the crucial role of the board in guiding capital flows into strategic and emerging industries for the development of new quality productive forces, Wan Zhe, an economist and professor at the Belt and Road School of Beijing Normal University, told the Global Times on Wednesday.

Wan said the reform of the STAR Market is important for the development of the Chinese economy and its industrial transformation and upgrading. 

"The STAR Market is a mirror of the reform and opening-up of China's capital market and the whole economy. We need to focus more on independent sci-tech innovations and problems related to economic upgrading, as the economy has entered a stage of high-quality development," she said.

The goal of building the country into a financial powerhouse means not only the development of a strong financial sector but also a financial sector that can contribute to Chinese modernization. 

In this regard, capital market reforms should continue to deepen in driving the development of new quality productive forces, Wan said.

Delivering a keynote speech at the Lujiazui Forum in Shanghai on Wednesday, CSRC Chairman Wu Qing stressed that cracking down on financial fraud by listed companies is a consistent priority for regulatory enforcement. The CSRC is working with relevant departments to strengthen regulatory measures, encourage whistleblowers, and hold intermediary organs, like underwriters and auditors, accountable.

He noted that the CSRC's commitment to protecting investors means that it will thoroughly investigate and punish any illegal activities in delisting cases, ensuring that those responsible will be held accountable and dealt with according to the law.

In April, the State Council released a new guideline, widely known as the State Council Nine-Point Guideline, to boost the high-quality development of the country's capital market through 2035.

The high-quality development of the capital market will not only increase the breath, depth and opening-up of China's capital market and better boost the development of new quality productive forces, but also enhance the international competitiveness of China's financial industry, Dong Yun, director of the Research Center for International Political Economics of the National Institution for Finance and Development, told the Global Times.

Dong said that efforts should be made to deepen the reform of the basic system of the capital market over the next five years and formulate mechanisms that accommodate China's domestic situation, in order to lay a solid foundation for the healthy development of the capital market.

For this purpose, we should appropriately handle the relationships among reform, development and stability, Dong said. He called for stepped-up efforts to strengthen regulations, prevent risks, and stabilize expectations and confidence so as to boost the healthy development of the capital market and contribute to the high-quality development of the Chinese economy.

Over the past three decades, the Chinese capital market has made significant progress in developing market systems. Marked by comprehensive and prompt information disclosure, the protection of investors' legitimate interests, and stringent measures against market manipulation, the Chinese capital market is progressively evolving toward greater fairness and transparency.

As China persistently advances in opening-up and is innovatively restructuring its capital market, there has been a steady inflow of overseas capital. According to media reports, net northbound capital flows into the A-share market exceeded 90 billion yuan ($12.4 billion) in the first five months of the year, double the total amount recorded in 2023.