Capital markets possess unique advantages in supporting technological innovation. In recent years, from venture capital to IPO financing and mergers and acquisitions, capital markets have continuously improved their comprehensive lifecycle service system for technology companies, providing solid financial support for technological self-reliance and strength.
Market participants believe that capital markets need to further improve institutional support systems covering the entire lifecycle of technology enterprises. Galaxy Securities Chief Economist Zhang Jun stated that first, in terms of institutional supply, reforms should continue to deepen based on the achievements of the STAR Market and ChiNext board reforms, forming a multi-tiered market structure serving "from R&D to industrialization," while continuing to activate the M&A market and guiding quality enterprises to enhance core competitiveness through mergers and integration. Second, cultivate "patient capital" and promote long-term capital to increase equity investment allocation. Third, improve equity incentive and refinancing systems to support listed companies in continuous optimization and strengthening. Finally, expand the investment scope for qualified foreign institutional investors to attract global funds and resources, promoting high-level circulation of technology, capital, and industry.
**Building Systems: Improving Full Lifecycle Support Mechanisms**
In recent years, regulatory authorities have promoted the improvement of multi-tiered capital market systems. The main board, STAR Market, ChiNext board, Beijing Stock Exchange, and NEEQ, along with private equity and venture capital funds, each have distinct characteristics and differentiated development, effectively expanding coverage for technological innovation.
Simultaneously, focusing on serving new quality productive forces development, the CSRC has successively launched policies including "16 Measures Supporting Technology," "STAR Market Eight Measures," implementation opinions on capital markets fulfilling the "Five Major Articles" of finance, and STAR Market "1+6" reforms, continuously optimizing service systems. Particularly in June this year, a growth tier was established on the STAR Market, the fifth listing standard was launched, and the industry application scope of the fifth listing standard was expanded to cover more frontier technology fields such as artificial intelligence, commercial aerospace, and low-altitude economy. ChiNext officially launched the third listing standard, providing differentiated channels for hard-tech enterprises at different development stages. To date, the "two innovation boards" have newly accepted IPO applications from 5 unprofitable enterprises.
Under a series of policy support measures, the "technology content" of capital markets continues to improve. Over 90% of newly listed companies are technology enterprises or companies with high technology content. The number of strategic emerging industry companies in the A-share market accounts for more than half of the total. The market value proportion of A-share technology sectors exceeds one-quarter, significantly higher than the combined market value proportion of banking, non-banking financial, and real estate sectors. This fully reflects the optimization of listed company structure and the leap in technology content.
Meanwhile, capital markets continue to promote high-level opening to the outside world, supporting technology enterprises' overseas listings and making good use of "two markets and two resources" both domestically and internationally.
To further increase support for technological innovation and new quality productive forces development, it is necessary to further enhance the institutional inclusiveness of capital markets. Tian Xuan, Dean of the National Institute of Financial Research at Tsinghua University, stated that further enhancing institutional inclusiveness requires coordinated advancement in optimizing regulatory systems for issuance and listing, trading, M&A, and delisting, promoting bond market innovation, and strengthening differentiated service functions of multi-tiered capital markets. Simultaneously, deepen coordination mechanisms between different boards to form a gradient cultivation chain for technology enterprises and build a full lifecycle support system.
"The key to enhancing institutional inclusiveness lies in clearing capital formation mechanisms, improving full-chain services, and establishing sound incentive and constraint frameworks," Zhang Jun stated. The growth pattern of technology enterprises "taking ten years to forge a sword" requires institutional inclusiveness to be deepened in three dimensions: First, refine listing systems and strengthen functional division between STAR Market and ChiNext board, providing precise channels for hard-tech enterprises at different stages through differentiated standards. Second, strengthen patient capital to alleviate mismatches between capital short-termism and innovation long cycles. Finally, build a financial service system covering the entire lifecycle while maintaining both inclusiveness and prudence, strengthening information disclosure and interim and post-event supervision, and firmly maintaining risk bottom lines.
**Optimizing Ecosystems: Promoting Deep Coupling Between Capital and Innovation**
Long-term capital and patient capital are important sources of funding for technological innovation. Private equity and venture capital funds have become important sources of patient capital due to their long-term investment attributes and high risk tolerance.
In recent years, the CSRC has continued to deepen reforms, actively promoting optimization of the equity venture investment industry ecosystem, working to smooth the entire chain mechanism of fundraising, investment, management, and exit, and better leveraging the important role of private equity and venture capital funds in supporting technological innovation.
Currently, private equity and venture capital funds have become key drivers promoting technological innovation and new quality productive forces development. As of the end of the second quarter this year, China's private equity and venture capital funds managed assets totaling 14.4 trillion yuan, with 150,000 invested projects and 8.97 trillion yuan in invested principal. Among these, investments in high-tech enterprises account for 50% by number and 54% by invested principal, while investments in startup tech companies account for 32% by number and 21% by invested principal. Additionally, since the registration system reform, over 90% of STAR Market companies, Beijing Stock Exchange listed companies, and more than half of ChiNext listed companies have received capital support from private equity and venture capital funds during their growth processes.
Regarding further developing and strengthening patient capital, Tian Xuan believes it is necessary to build a multi-level, multi-dimensional support system. First, strengthen top-level design and policy coordination by incorporating technology investment into long-term fund assessment systems. Second, promote social security funds, enterprise annuities, and occupational annuities to increase allocation proportions in technology fields and establish performance evaluation mechanisms matching investment cycles. Third, support state-owned capital in establishing "technology achievement transformation mother funds," promote "investment-loan linkage" and "investment-insurance linkage" models, and establish "technology investment risk compensation funds." Finally, improve exit mechanisms for private equity and venture capital, expand share transfer pilot ranges, and support diversified pathways through M&A, IPOs, and other means to achieve positive capital circulation.
"Developing and strengthening patient capital requires building institutional systems matching the long-cycle characteristics of technological innovation," Zhang Jun believes. The primary task is to broaden long-term funding sources and enhance participation enthusiasm through differentiated regulatory arrangements, tax preferences, and investment ratio ceiling adjustments, while improving fund evaluation and assessment systems to correct "short-sighted" tendencies of funds. Second, improve supporting mechanisms to enhance the sustainability of long-term capital. Finally, institutional supply needs to combine with stable policy expectations and investment culture. Through clear industrial policies and technology roadmaps, enhance investor confidence in future development while leveraging the value discovery capabilities of professional investment institutions to promote capital focus on enterprises' endogenous growth potential.
**Improving Quality: Empowering Technology Enterprises to Optimize and Strengthen**
In recent years, capital markets have continuously improved M&A and refinancing systems, enriched investment products and risk management tools, built dual-wheel driven service systems with stocks and bonds, and increased support for technological innovation.
In September last year, the CSRC issued "Six M&A Measures" to support listed companies' transformation and upgrading toward new quality productive forces. Subsequently, M&A market activity significantly improved, with traditional industry listed companies actively conducting cross-industry acquisitions toward new quality productive forces transformation, "two innovation boards" listed companies acquiring upstream and downstream assets in the same industry, and listed companies showing significantly enhanced enthusiasm for transformation and upgrading, industrial integration, and seeking second growth curves through M&A.
From innovation and entrepreneurship bonds to technology innovation corporate bonds, and then to the launch of the bond market "technology board" in May this year, bond market mechanisms supporting technological innovation continue to be optimized and improved. According to statistics, since the launch of technology innovation corporate bonds in March 2021, a cumulative 1.77 trillion yuan has been issued, with raised funds mainly invested in frontier fields such as semiconductors, artificial intelligence, and high-end manufacturing.
Under policy support and guidance, listed companies' R&D investment has grown year by year, currently accounting for more than half of national R&D expenditure. Data from the Listed Companies Association of China shows that in the first half of this year, listed companies' R&D investment exceeded 810 billion yuan, up 3.27% year-on-year, with overall R&D intensity at 2.33%. ChiNext, STAR Market, and Beijing Stock Exchange R&D intensities were 4.89%, 11.78%, and 4.63% respectively, with technology attributes further highlighted. A large number of companies have grown into industry leaders or hidden champions, driving collaborative innovation across industrial chains.
"Enterprise listing is just the starting point; continuous optimization and strengthening require institutional protection," Zhang Jun stated. Regulatory authorities need to optimize equity incentive and employee shareholding mechanisms, support refinancing investment in R&D, and enhance investor returns through reasonable dividends and buybacks, forming positive cycles between capital and innovation. Simultaneously, they should attract global resources through precise industrial policies and open market ecosystems, promoting high-level circulation.
Tian Xuan believes that next steps require relevant departments to further improve financing support systems for technology enterprises, encourage financial institutions to develop specialized financial products and services for technology enterprises, and effectively activate intangible assets of technology companies. Develop varieties such as high-yield bonds, convertible bonds, and innovation and entrepreneurship corporate bonds to meet diverse financing needs of technology enterprises. Support technology enterprises in establishing and improving long-term incentive mechanisms such as equity incentives and employee shareholding. Strengthen technology innovation policy support and industrial coordination to guide technology enterprises in increasing R&D investment and breaking through key core technologies.