The agenda today has three items, and the first decides the other two. Five years after the Beijing Stock Exchange (BSE) was announced — the milestone lands on September 2 — the question is no longer whether it can stand up, but what it has become. The answer, read in order, starts with a number that matters more than market capitalisation: of the 339 companies now listed, 220 are national-level little giant specialists, a share above 60 percent. That single ratio is the most decisive fact in the entire five-year file.
Why stop at five years to take stock? Because the number is a natural checkpoint: the exchange has now survived a full swing of the market’s mood — the launch euphoria, the cooling, the long grind of rebuilding investor confidence, and now a period in which it is being taken seriously. Anniversaries are arbitrary, but a five-year file is long enough to show patterns that a one-year snapshot hides. The question worth asking on September 2 is not whether the BSE is big — it is small next to the main boards — but whether it is becoming what it was designed to be. That is a different kind of question, and it needs a different kind of answer.
Read the memo in order, because the numbers and the reasoning follow the same line. In 2021, when the exchange was announced, there were 81 listed companies. Today there are 339. Total market value has moved from roughly 300 billion yuan at the open to about 840 billion yuan now. The number of qualified investors has risen from roughly 3 million at the start to more than 11 million — nearly a four-fold increase. Average daily turnover has crossed 20 billion yuan, a level that was unthinkable in the exchange’s first years, when daily turnover could be counted in single-digit billions.
But the growth numbers, read alone, can be misleading. What distinguishes the BSE is not scale but selection. The exchange was not designed to be a second main board; it was designed to be the funding channel for companies the main boards traditionally overlook — small and medium enterprises that are specialised, refined, distinctive and innovative. The little giant ratio is the proof of that design holding. Add the detail that 18 listed companies are national manufacturing champions, and that among new listings since 2025 the little-giant share exceeds 80 percent — and since 2026, above 90 percent — and the pattern becomes structural rather than accidental.
The numbers and the reasoning converge on the same conclusion: the BSE has solved the first half of its problem. It has established a clear positioning — cumulative financing for SMEs of roughly 80 billion yuan since inception, with public offering financing rising from 17.698 billion yuan to 80.573 billion yuan, an increase of about 355 percent. That is the standing-up phase, and it is largely complete. The board’s question now is not whether it exists, but how it strengthens.
The economic significance of the little-giant concentration is easy to miss if you read the BSE as just another exchange. Specialised SMEs sit in the narrow seams of supply chains — the precision part, the niche material, the process patent — where scale is not the competitive advantage and dominance is hard to copy quickly. A market that finances this cohort is, in effect, financing the parts of the industrial base that very large firms do not serve. That is why the 220-of-339 ratio matters beyond the exchange itself: it is a measure of whether the domestic capital market is reaching the companies where future margins live.
Item two on the agenda is liquidity, and this is where the honest scepticism begins. Daily turnover above 20 billion yuan is real progress, but it remains thinner than the main markets, and thin liquidity punishes investors in a specific way: exit is harder, price discovery is noisier, and valuations swing on smaller order flows. The exchange has been working the mechanics — market makers have grown from 13 to 24, and coverage of listed securities has passed 50 percent — and that is the right kind of plumbing to install. It is infrastructure work, slow and unglamorous, and it is exactly what the next phase needs.
The mechanics being installed matter more than they look. Market-making was long the missing layer in this market, because a thin book scared away precisely the institutional participants who could make it deep. Moving from 13 to 24 market makers and covering more than half the listed securities does not change the market overnight; it changes the bid-ask spread, the willingness of funds to hold positions, and the credibility of price discovery. These are slow-motion changes, the kind that show up in quarterly averages rather than daily headlines. But they are the difference between a venue and a market.
Here I want to correct myself before going further. In my first paragraph I called the little-giant ratio the most decisive fact, and I should be careful with the word decisive. It is decisive about positioning. It is not yet decisive about outcomes — a funding channel that attracts the right companies but cannot offer them deep enough liquidity is only half a market. The positioning is a necessary condition; the liquidity is the sufficient one. Keeping those two separate is what separates a considered assessment from a five-year anniversary puff piece.
The third item on the agenda is the most difficult: valuation discipline. A market with more than 11 million qualified investors and a rising tide of fund products — the number of mutual funds heavily holding BSE names reached 185 in the latest count, up 30 percent from the prior period — is a market that can run ahead of fundamentals. The next five years will be a test of whether the exchange and its companies can hold valuations that the fundamentals support, or whether the retail enthusiasm that built the 840 billion yuan cap becomes a liability the next time sentiment turns. Growth stories age quickly when the math stops matching.
There is a structural tension worth naming plainly. The exchange’s investor base is mostly individuals — more than 11 million qualified accounts — and individual investors in a small-cap market behave differently from institutions: they chase themes, crowd into momentum names, and exit together when sentiment turns. The rise of mutual funds heavily positioned in BSE names, now 185 funds, is a partial institutionalisation of that retail base. Whether that institutional share keeps growing is one of the quiet variables that will determine whether the next correction is orderly or disorderly.
One question I have been asked more than once, in various forms, is whether these numbers will survive a down market. The honest answer is that nobody knows; the more useful answer is that the exchange has been building the instruments that improve its odds. More than half of listed securities now have market-making coverage, the fund complex has grown to 185 vehicles, and the investor base is deep enough to absorb normal-sized orders without moving the tape the way it once did. Those are not guarantees of a soft landing, but they are the difference between a market that can be corrected and a market that can only collapse. For a five-year-old venue, having the former is already a statement — and the next five years will test whether that statement holds when the enthusiasm fades.
What makes this phase genuinely different from the earlier one is the quality of the cohort. New listings since 2026 being more than 90 percent little giants is not a coincidence; it is the exchange’s own selection working as designed. Companies that are specialised, with patents, niche market positions and genuine margins, are exactly the cohort that can absorb the investor attention the exchange now commands. That is the strategic answer to the liquidity question: depth will follow the quality of the names, or it will not follow at all.
The question of how the next five years play out reduces, in the end, to a choice between two readings of the same numbers. The optimistic reading: the BSE has built a working mechanism for financing China’s specialised SMEs, liquidity is compounding, and the little-giant cohort gives investors a reason to stay. The cautious reading: market value and investor counts are headline-friendly, but turnover depth, valuation discipline and the durability of small-cap enthusiasm have not been tested in a full down-cycle. The first five years answered whether it can stand up. The next five will answer whether it can strengthen. The board’s question is not whether, but how — and that is the difference between a decision and a hope.
Personally, I lean toward a measured verdict. Five-year anniversaries invite triumphalism, and the temptation is to quote the 355 percent financing growth and stop there. But the most useful conclusion a board-memo reader can take away is narrower: the BSE has decisively answered the positioning question — it is the market for specialist SMEs, and the little-giant ratio is the evidence on the record. Everything else — the liquidity depth, the valuation discipline, the behaviour of 11 million investors in a correction — remains an open agenda item. The structure is built. The proof of the structure is in what the next five years do with it.
The fairest way to frame the next five years is comparative. Other markets that tried to serve small innovative companies have histories that wobble between boom and shrinkage. The BSE’s advantage is a defined mandate and a cohort that the state has explicitly prioritised; its risk is the one every small-cap market faces, which is that liquidity follows momentum and abandons patience. The exchange does not need to be the size of the main boards to succeed; it needs to be deep enough that a genuine little giant can raise capital on fair terms in any market climate. That is the bar. Everything else is a headline.
Let me add one structural point that the anniversary coverage tends to compress into a footnote. The BSE’s role in the broader reform of China’s capital markets is not limited to its own listings; it has also acted as a laboratory for mechanisms — tiered requirements, market-making, retail protection rules — that can be tested at small scale before being considered elsewhere. That is an unglamorous function, but it is a real one, and it is part of why the exchange matters beyond its own market value. A laboratory that produces no breakthroughs is still a useful building; the BSE, on the evidence of the last five years, has produced a few.
That is the agenda. Item one, positioning, has been decided. Items two and three, liquidity and discipline, are where the next board meeting will actually happen. Read the memo in that order, and the numbers and the reasoning stay in line — 339 companies, 220 little giants, 80 billion yuan in cumulative financing, 20 billion yuan in daily turnover. The decade’s work is ahead. The five-year file is simply the evidence that the right companies are in the right building.
I will close with the figure I keep returning to: daily turnover above 20 billion yuan, against a base of less than a billion when the exchange opened. That is the single most honest measure of whether the market has escaped its early nickname as a place where nothing trades. It has. The remaining test is whether it can hold that depth through a cycle of bad news, because markets are only proven in the moments when investors want to leave. The BSE’s first five years built the right shelf. The next five will tell us whether the books on it keep selling.