Beijing Stock Exchange new stock issuance enters a reform window period; industry experts discuss the feasibility of market cap-based IPOs

Securities Times Reporter Zhong Tian

Recently, the popularity of new stocks on the Beijing Stock Exchange (BSE) has surged, IPO expansion has accelerated, and trillion-yuan funds are regularly entering the market for IPO subscriptions. Notably, Zhongke Yi has resumed inquiry-based issuance and listing after three years, signaling a market-oriented pricing reform.

Along with multiple iterations of the BSE’s IPO mechanism, the drawbacks of pure cash-based IPOs have become apparent, such as insufficient institutional participation and difficulty for retail investors to win allocations. The feasibility of implementing market cap-based IPOs and the design of related systems have become focal points of market attention.

Resumption of Inquiry Reflects Market Trend

Since 2026, the pace of new stock issuance on the BSE has significantly accelerated, with supply expansion and profit incentives becoming more prominent. As of the close on May 14, a total of 25 new stocks have been listed this year, with an average first-day increase of over 163%. IPO subscription gains remain strong, with online subscription funds maintaining around 850 billion yuan, reflecting high market enthusiasm. Meanwhile, the BSE’s “reserve pool” is well-stocked and continuously expanding. As of early May, more than 70 projects are either approved but pending issuance, registered, or under review.

Since its opening, the BSE’s IPO mechanism has been continuously optimized in line with market development, experiencing full cash prepayment, pilot offline inquiry, suspension of inquiry, cancellation of issuance price floors, and significant relaxation of strategic placement rules. Each adjustment has focused on two core issues: rationality of pricing and institutional participation. In April 2026, Zhongke Yi became the first hard-tech enterprise in three years to restart offline inquiry, marking a comprehensive shift toward market-based pricing. The stock was issued at 16.21 yuan per share, with a P/E ratio of 35.23 times, and on the first day, it surged 3.44 times. Its current price exceeds 100 yuan, a 5.97-fold increase over the issuance price.

Liu Jing, an analyst at Shenwan Hongyuan Research Institute, believes that this inquiry restart features two major changes: first, the removal of the price floor mechanism, which previously distorted quotes and turned inquiry into de facto pricing; second, an improved quoting ecosystem where institutional investors, represented by public funds, take the lead in pricing, reducing the influence of individual investors’ quotes. The reform aims to promote market-based pricing, uncover intrinsic enterprise value, and enhance the attractiveness of the BSE to high-quality innovative companies.

Xi Qingqing, Chairman of Qingbo Ming Capital, stated that resuming inquiry-based issuance benefits companies by allowing them to share more of the proceeds. Under the current direct pricing model, new stocks tend to see high gains, and inquiry-based issuance can reduce arbitrage from debt funds, improving fundraising efficiency.

Controversy Over Market Cap IPOs Continues

As the BSE’s trading volume expands and IPO supply continues to grow, calls for introducing market cap-based IPOs are rising, but opposition remains strong. Debates focus on feasibility, potential risks, and market fit.

Zhu Weiyi, a senior market expert and Vice President of Huaxing Certified Public Accountants, firmly supports promoting market cap IPOs. He states that trading activity on the BSE has significantly increased, and with the 15-fold P/E ratio constraint, new stock issuance faces no failure risk. The timing for market cap IPOs is now ripe.

“Currently, the BSE has trillion-yuan-level IPO funds in normal operation. For example, Haichang Intelligent and Zhenhong Shares have subscription funds exceeding one trillion yuan. Much of this is arbitrage capital and does not enter the secondary market.” He believes that maintaining the current pure cash IPO model leads secondary market investors to abstain from participation due to high thresholds and reluctance to hold new stocks, causing institutional outflows due to insufficient profit incentives. Introducing market cap IPOs could guide IPO funds into blue-chip stocks as a core holding; even if new stocks do not rise as expected, investors would tend to buy more rather than sell, allowing long-term secondary market investors to enjoy IPO benefits rather than arbitrage funds profiting.

“IPO should reward secondary market investors who stick with it, not arbitrage investors,” Zhu said.

Opponents argue that mature markets like the US, Europe, and Hong Kong all adopt cash subscription models, and the BSE should learn from these experiences rather than blindly copying the Shanghai and Shenzhen models.

Xi Qingqing analyzed from a market fundamentals perspective: “Currently, the number of listed companies on the BSE is small, and their stock movements are volatile. The proportion of long-term investors is low. For market cap IPOs, technically, Shanghai and Shenzhen’s market caps need to be included in the calculation. Currently, market cap IPOs in Shanghai and Shenzhen are calculated separately and cannot be mixed. If the BSE implements separate calculations like Shanghai and Shenzhen, the small number of listed companies and low long-term investor proportion could lead to issuance failures.”

Liu Jing remains cautious. He believes that, given the significant increase in institutional participation on the BSE, implementing market cap IPOs could greatly boost institutional enthusiasm. However, based on current operations, the necessity and risks must be balanced. From a necessity standpoint, the current cash IPO system still sees subscription multiples over 200 times, and failure risk remains low. From a risk perspective, short-term, large inflows of arbitrage capital could cause market volatility. Essentially, the small market size of the BSE is a fundamental issue. “We believe that once the BSE grows larger, it will evolve in this direction, but whether there is an urgent need now is still debatable.”

Senior financial commentator Pi Haizhou directly dismissed the feasibility of market cap-based allocations. He pointed out that the total tradable market cap of all stocks on the BSE is only over 500 billion yuan, less than the market cap of many individual A-share stocks. If market cap allocations are adopted, institutional and retail investors would passively hold large amounts of BSE stocks, likely inflating prices and harming long-term market health.

Regarding including Shanghai and Shenzhen market caps in BSE IPO quotas, Pi Haizhou also considers it inappropriate. “Currently, the IPOs in Shanghai and Shenzhen are calculated based on their respective market caps. If the BSE’s IPOs include Shanghai and Shenzhen’s market caps, it would strip the BSE of its unique characteristics.”

Designing a Gradual, Differentiated Path

Based on multiple perspectives, directly copying the Shanghai-Shenzhen pure market cap IPO model on the BSE is risky and incompatible with its small, specialized, and innovative enterprise-focused market positioning. However, many experts have proposed specific schemes at the threshold, model, and supporting rule levels.

Zhu Weiyi suggested a layered, phased approach, recommending policies favoring secondary market investors’ interests. Like the transition from internal combustion engines to pure electric vehicles—hybrids—could be a transitional stage, the BSE’s online IPOs could adopt a “market cap + cash” model. Similar to offline inquiry, where market cap is the basis for inquiry, and funds are still a factor. For offline inquiry, he proposed raising the threshold from 10 million yuan to a split approach, such as 7 million yuan in Shanghai/Shenzhen market cap plus 3 million yuan in BSE market cap, to lower participation barriers and attract more qualified investors, improving pricing rationality. For cash IPOs, a 500,000 yuan market cap threshold could be set as a prerequisite, with the existing cash IPO rules remaining—more funds, more allocations—balancing fairness and participation enthusiasm.

Pi Haizhou proposed a middle-ground scheme of funds subscription plus account-based allocation, which could avoid massive waste of IPO funds and give more IPO accounts a chance to win allocations. “On one hand, the BSE still uses funds subscription; on the other hand, the amount each IPO account can subscribe should be limited, for example, to 5,000 shares per account (adjustable based on IPO scale). This way, individual IPO accounts’ subscription amounts are limited, preventing large-scale fund participation.”

He believes this approach not only avoids large-scale fund waste but also allows more accounts to participate, protecting small and medium investors’ interests—a win-win or even a multi-win scenario.

In summary, a more reasonable path now is to adopt a transitional scheme, and once market conditions mature, gradually explore a more suitable long-term model for the BSE.

“If market cap IPOs are introduced, I suggest following the Shanghai-Shenzhen system, which is already very mature and well-functioning,” Liu Jing said.