Despite the broader downturn in China’s local equities, shares of the country’s small and medium-sized companies are showing signs of entering a bull market. This is particularly evident in the performance of the Beijing Stock Exchange 50 Index, which tracks early-stage innovative companies listed in the capital. The index rose by 3.1% on Monday alone, representing a gain of over 19% since October.

What makes this stand out is that it has outperformed its larger, tech-heavy peer by 12 percentage points and even beaten the benchmark CSI 300 Index by 16 percentage points. This has made it a bright spot in China this quarter, offering investors some relief from the overall market volatility.

The strong rebound on the Beijing board can be attributed to several factors. Firstly, the wider fluctuation range of up to 30% allowed for its constituents compared to as much as 20% for other gauges such as Shanghai and Shenzhen. Secondly, investors’ light positioning in these companies and regulators’ consideration to include eligible securities into the CSI cross-market index system have also been seen as catalysts for growth.

It is worth noting that despite being launched only two years ago, the Beijing exchange was intended to help small firms raise funds and make China’s financial markets more diverse. While still relatively small compared to other options with assets of around $31 million, moderate investment suggests that there may be potential for further growth in this space going forward.