Three’s a crowd — at least, it should be when it comes to stock markets in the same country doing the same thing. Fragmentation divides investor attention and liquidity. And when new entrants steal all the limelight, it can lead to a predictable cycle of booms and busts.
For evidence, take a look at China’s Beijing Stock Exchange, the newest of its innovation-focused bourses. This year it has attracted more than twice as many listing applicants as its two rivals combined, while an index of its top 50 listings is up more than 50 per cent.
Beijing’s bourse was launched in its current form in 2021 to help innovative smaller companies raise capital. It promised fewer requirements, plus a speedy system to process applications. Before that came Shanghai’s STAR Market in 2019, notable for giving companies more control over their listing timetable. A decade earlier, Shenzhen’s ChiNext caused a stir by lowering the profitability requirement for companies seeking to list.