Initiating the Transformation

On July 22, 2026, the STAR Market will celebrate its seventh anniversary. Over the past seven years, this pioneering reform platform for China's capital markets has gathered over 610 tech-focused companies, with a combined market capitalization surpassing 14 trillion yuan. It has established increasingly complete industrial chain hubs in strategic fields like integrated circuits, artificial intelligence, biomedicine, and quantum technology. At this significant juncture, the market is closely watching the STAR Market's vital role in improving China's investment and financing systems and supporting technological innovation, as well as the institutional challenges that still need to be addressed. Wu Xiaoqiu, a top professor at Renmin University of China and director of its National Academy of Financial Research, has provided a systematic analysis of these issues.

Reshaping the Core Logic of A-Share Assets

"The landmark institutional breakthrough of the STAR Market's seven-year exploration lies in reshaping the fundamental rules for public listings," Wu stated. In his view, before the STAR Market's creation, traditional main boards and the ChiNext had relatively clear profitability thresholds. The STAR Market broke this tradition, particularly with the Shanghai Stock Exchange's fifth set of listing standards. This allows companies that are not yet profitable but have achieved key milestone results in core R&D and commercialization to go public. This fundamentally aligns with the growth characteristics of tech startups, which have long R&D cycles, significant upfront investment, and periodic losses.

"The core value of this change is that the capital market's valuation logic has shifted from 'looking at past performance' to 'looking at future growth expectations,'" Wu explained. This institutional breakthrough has given the STAR Market three irreplaceable strategic values. First, it accurately serves strategic emerging industries by targeting high-quality development needs. The STAR Market has gathered leading companies in the AI computing power supply chain, such as Hygon Information Technology, Semiconductor Manufacturing International Corporation (SMIC), and Cambricon Technologies, and has also seen the listing of memory giant CXMT. It plays a critical role in solving key core technology bottlenecks in chips and AI. The STAR Market's role in bridging the gap from lab technology to industrial application, driving tech innovation, and fostering new quality productive forces is evident to all, truly allowing the value of tech enterprises to shine.

Second, it has comprehensively optimized the industrial structure of A-share listed companies. The STAR Market's establishment has changed the traditional A-share landscape, which was dominated by finance, consumption, and traditional manufacturing with a weak tech focus. Currently, the STAR Market hosts over 40 companies involved in future industries like quantum technology, 6G, and humanoid robots. It has largely built a complete AI industrial chain covering computing power infrastructure, data processing, large models, and industry applications.

Third, it has completed a reform of the capital market's asset side. Artificial intelligence is a transformative era-defining change comparable to the steam engine and the electric revolution. It is no longer just a single tool but a foundational background reshaping all industries. The STAR Market is a core gathering place for domestic AI industry assets, providing the market with technology assets that have long-term growth expectations. "However, the nature of innovation in science and technology is inherently high R&D intensity, high investment, and high uncertainty. Stock price volatility is significantly higher than in traditional industries, and investors need to fully recognize this," Wu cautioned.

Navigating Tech Cycles with a Long-Term View

Regarding recent market fluctuations, Wu offered several suggestions for retail investors. First, establish a risk-aware mindset and avoid speculative psychology of going all-in or seeking quick riches. The tech sector is highly cyclical, and short-term volatility does not signify the end of an industry's development trend. Investors should firmly grasp the rigid demand sectors of the digital economy, maintain strategic resolve, and not be shaken by temporary price swings.

Second, build a fundamental investment logic. Valuation judgments for the STAR Market should be based on fundamentals like real company performance and core technological competitiveness. View market fluctuations objectively, avoid blindly following hype, and prevent being swayed by market sentiment.

Third, distinguish between value investing and short-term speculation. Traditional consumer and financial companies have stable earnings and relatively mature valuation methods. In contrast, tech companies in AI and storage have rapid technology iteration and are difficult to value. Small and medium investors can diversify risk through portfolio investing, avoiding concentrating all funds in highly volatile individual stocks.

"The STAR Market's growth itself is a continuous process of trial, error, correction, and improvement. Short-term market downturns will not change the long-term upward trend of China's technology industry. Rational investors will ultimately reap rewards from the dual dividends of institutional improvement and industrial progress," Wu stated.

Clarifying Boundaries and Filling Institutional Gaps

"While highly affirming the STAR Market's strategic value, seven years of practice have revealed some deviations in institutional execution. The main misunderstanding lies in confusing 'research institutions' with 'market-oriented tech entities,'" Wu acknowledged. He noted that across the full chain from listing and M&A to delisting, the STAR Market still has shortfalls that need addressing. At the entry point, reviews must strictly maintain 'hard tech' credentials to prevent tech-hollow companies from listing. In M&A, processes need to be simplified to align with tech companies' technology integration needs and improve efficiency. For delisting, strict enforcement is required to promptly remove companies without sustainable operations or with outdated technology, maintaining the board's vitality through survival of the fittest.

"In the long run, the STAR Market and the main board need to form a pattern of differentiated development and complementary coordination to build a multi-layered tech capital market system and avoid homogenized competition," Wu said.

Building a Tech-Finance System with Chinese Characteristics

Wu believes that from the perspective of global tech competition, the STAR Market has carved out a path for China's tech-finance development, characterized by "government guidance plus market leadership." China has relatively obvious weaknesses in basic principle innovation but has significant advantages in technology transformation and industrial development. The STAR Market is a crucial capital platform for undertaking technology industrialization.

"The greatest contribution of the STAR Market's seven-year exploration is using institutional inclusiveness to secure growth space for hard tech. But the other side of the institution—a 'zero-tolerance' policy towards fraud and a commitment to fair rules—determines how far this reform can go," Wu said. In his view, the cornerstone of all capital market reforms is information transparency, which is also the most pressing issue. The biggest market risk comes not from price volatility but from financial fraud and fraudulent listings. Some companies have continuously inflated their performance for years after listing, creating long-term risks. Comprehensive measures must be taken to curb fraudulent behavior by listed companies at the source. In recent years, regulators have intensified efforts to crack down on financial fraud and fraudulent issuance.

"Looking ahead, the AI era is likely to see the emergence of more tech giants. Society needs to establish a wealth distribution concept that is inclusive of innovation. High wealth earned through technological innovation and entrepreneurial investment, as long as it does not cross legal boundaries, should be respected and protected by the system," Wu proposed. The core function of the capital market is not only financing and investment but also a mechanism to incentivize and realize innovation. Only by providing institutional premium returns to tech pioneers who take on high risks can society's innovation vitality be continuously stimulated.

Seven years is a starting point, not an end. Wu stated that as a vital capital platform for cultivating new quality productive forces, the STAR Market needs to continuously optimize listing review standards, strengthen the rule of law for information disclosure, and open capital channels from basic R&D to industry leaders. Leveraging tech-finance, it must help China break through key core technology blockades and complete the capital market's deep transformation from a traditional financing market to a comprehensive platform for innovation incentives and wealth management.