
Credit: Imaginechina via AP Images
Ant Group, China’s financial technology behemoth and the world’s most valuable private company, this week filed for a dual listing in Shanghai and Hong Kong. The move represents a coup for the mainland’s stock markets. The IPO, which will take place on the Hong Kong Stock Exchange and a new Shanghai Stock Exchange board called the STAR Market, could raise as much as $30 billion and value Ant at more than $200 billion.
What is the STAR Market, and what explains its rapid growth? This week, we introduce you to the new exchange and its companies.
What is the STAR Market?
The Shanghai Stock Exchange’s Sci-Tech Innovation Board, or STAR Market for short, was established in July 2019.
The Chinese government established the board partly to provide a domestic venue similar to Nasdaq in the U.S, for China’s high-tech companies to raise capital.

Data: Dealogic
STAR Market’s looser rules compared to those of other mainland Chinese exchanges make it an attractive venue for listing. Companies do not need to be profitable, the approval process for listing is much faster, and there is no cap on price-to-earnings ratios for IPOs and no ceiling on trading gains in the first five days.
U.S. restrictions, such as the addition of companies to the Entity List, and threats to delist Chinese companies from U.S. exchanges, may also make STAR more attractive for China’s high-tech enterprises.
The STAR Market, with 138 IPOs since last year, trails closely behind the Hong Kong Stock Exchange, though both are well behind Nasdaq’s 194 IPOs. STAR Market IPOs have raised close to $21.7 billion thus far, according to data from Dealogic.
However, some observers have questioned the exchange’s success, commenting that the stock prices may exceed accurate valuations of its companies, many of which are unprofitable.
STAR Market Outperformed Similar Markets
The STAR Market has outpaced comparable exchanges, according to data from indexes.
The STAR 50 Index, established this July, measures the performance of 50 of the biggest stocks on the exchange.1the stocks must be listed for at least six months to be included The Shanghai Stock Exchange and the China Securities Index Co. released historical data for the index to the beginning of this year.

Also this July, the Hong Kong Stock Exchange debuted the Hang Seng TECH Index, which represents the 30 largest tech companies listed in Hong Kong, including Alibaba, Tencent, Meituan Dianping and Xiaomi.
Since January, the STAR 50 Index has edged out both the Hang Seng TECH Index and Nasdaq-100 Index, which includes many of the biggest Western tech companies such as Apple, Amazon and Alphabet.
Companies Listed on the STAR Market

The majority of companies listed are in high-tech industries, including drug development, semiconductor design and manufacturing, smartphones, cybersecurity, and more.
The semiconductor industry, which Beijing seeks to boost partly in response to U.S. export restrictions, has at least 19 companies listed on the STAR Market. These companies are among the most popular on the exchange — half of the top ten companies by market capitalization are semiconductor companies.

Many of the companies are relatively new, with an average age of about 15 years. This appears to follow a global trend as technology companies take off. A 2017 Credit Suisse report found that the average age of companies in the S&P 500 was fewer than 20 years, down from close to 60 in the 1950s.
Multiple companies listed on the STAR Market used to be listed in Hong Kong or the U.S., including Bloomage Biotech (taken private in 2017) and SMIC (delisted from NYSE last year), and several are dual-listed on the STAR Market and elsewhere, such as CanSino Biologics.
Top 12 Companies Listed on the STAR Market
$25.8b

SMIC, which is majority state-owned, is China’s largest semiconductor manufacturer. China has been investing heavily in semiconductors in recent years, including in SMIC. However, SMIC’s manufacturing technology is still years behind industry-leading competitors TSMC and Samsung.
$23.4b

Kingsoft Office Software is known for its WPS Office software suite, which competes with Microsoft Office. It is a subsidiary of Kingsoft Corp., the Hong Kong-listed conglomerate controlled by Xiaomi founder Lei Jun.
$15.9b

NSIG, a majority state-owned company, makes silicon wafers and other materials for semiconductors through its subsidiaries Zing, Okmetic (a Finnish company acquired by NSIG in 2016) and Simgui. It also has shares in Soitec, a French semiconductor materials company.
$15.5b

AMEC makes equipment used for semiconductor fabrication. Their equipment is capable of helping etch chips at process nodes as low as 5nm, which is close to the current state-of-the-art technology. The company is at least 46% state-owned.
$13.9b

Montage is a fabless semiconductor company making chips for AI and cloud computing applications. They primarily design memory chips for use in data centers, and they have also partnered with Tsinghua University and Intel (which has a 9% stake in Montage) to build products.
$11.6b

Cambricon, spun out of the Chinese Academy of Sciences in 2016, designs chips for AI applications. The company used to make smartphone chips for Huawei, but Huawei has since switched to designing its own chips. Its investors include Alibaba and iFlyTek (a voice recognition company on the U.S. entity list).
$11.2b

Junshi Biosciences develops macromolecular drugs (made from proteins) to treat autoimmune diseases, cancer, osteoporosis, and more. They signed an agreement with Eli Lilly and Co. earlier this year to develop an antibody treatment for Covid-19.
$10.6b

Transsion, based in Shenzhen, makes mobile phones and provides mobile services. Its phones, sold under the brand names Tecno, Itel and Infinix, hold a majority of the mobile phone market share in Africa.
$10.1b

$9.3b

Bloomage Biotech manufactures hyaluronic acid and medical and beauty products made with hyaluronic acid. They are the largest raw hyaluronic acid producer in the world, according to one of their websites. The company went public in Hong Kong in 2008 and de-listed in 2017.
$9.2b

CanSino Biologics develops vaccines. They have one approved Ebola vaccine and 16 other vaccine candidates in the approval pipeline, including a Covid-19 vaccine currently in clinical trials. The company is also listed in Hong Kong.
$9.0b

VeriSilicon is a semiconductor designer and manufacturer headquartered in Shanghai and with offices around the world, including two R&D centers in the U.S. Its major investors include IDG Capital, Xiaomi and the venture arms of Intel and Samsung.
Data: CapitalIQ, Shanghai Stock Exchange, The Wire’s data division

Emma Bingham is a Boston-based editor for The Wire. Previously, she was editor in chief of The Tech at the Massachusetts Institute of Technology. @emmapbingham