China’s small and medium-sized companies are defying the broader slump in local equities and are on track to enter a bull market. The Beijing Stock Exchange 50 Index, which measures early-stage innovative companies listed in the capital, rose 3.1% on Monday, with gains from an October low of over 19%. This index has outperformed its larger, tech-heavy peer by 12 percentage points and the benchmark CSI 300 Index by 16 percentage points, making it a shining star in China this quarter.

The strong rebound on the Beijing board this month is due to several factors. Firstly, a wider fluctuation range of 30% allowed for its constituents in either direction compared to a span of as much as 20% for the Shanghai and Shenzhen gauges. Additionally, investors’ light positioning in these companies and regulators’ consideration to include eligible securities into the CSI cross-market index system have also served as catalysts for growth in this area of the market.

Investors are showing interest in these companies with the largest of around a dozen exchange-traded funds tracking the index having assets of about 228.8 million yuan ($31.9 million). The Beijing exchange was launched two years ago with the aim of helping small firms raise funds and making China’s financial markets more diverse. With its impressive performance, it’s clear that this goal is being achieved.