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The implementation of a comprehensive registration system will further streamline the "fund-raising, investment, management, and exit" process, enhancing the capital turnover efficiency for venture capital institutions. This will provide smoother liquidity for venture capital funds and facilitate a virtuous cycle between technological innovation and capital formation. Additionally, it will optimize the collaborative linkage between entrepreneurship, innovation, and venture capital, further improving the exit environment for private equity and venture capital investments. Venture capital institutions should adhere to the principles of investing early, investing in small-scale projects, and investing in technology, in order to create an enterprise service ecosystem that spans the entire life cycle and value chain. Through in-depth research on investment targets within the industry chain, they can truly discover high-quality projects with growth potential, innovation, and technological content.
The relevant rules and regulations for the full implementation of the stock issuance registration system have been officially published and implemented recently. What changes will occur in the primary market ecosystem under the comprehensive registration system? What opportunities and challenges will the new regulatory rules bring? How should venture capital institutions adapt to the new primary market ecosystem? Zhang Wei, Chairman of CoStone Capital, participated in the discussion on these topics at the "Shanghai Securities Roundtable.''
Shanghai Securities Journal: What changes will the implementation of the comprehensive registration system bring to the primary market ecosystem?
Zhang Wei: The formal implementation of the comprehensive registration system is a "ceremony" for the A-share market. This means that the phase in which venture capital institutions can profit from investing in listed companies has ended. Under the comprehensive registration system, the valuations in the secondary market will show a trend of polarization, which will push primary market investment institutions to be more cautious in selecting targets, continuously improving their industry awareness, professional capabilities, and risk control abilities.
At the same time, there will be a further strengthening of the trend of investing early, investing in small-scale projects, and investing in technology, which will be conducive to supporting small and medium-sized enterprises and startups, as well as the implementation of an innovation-driven development strategy.
Shanghai Securities Journal: The conditions for the listing of unprofitable companies on the ChiNext board are already mature. What impact will this have on the primary market? What changes will occur in the investment logic of venture capital institutions?
Zhang Wei: Venture capital institutions have relatively strict standards for investing in unprofitable companies and are relatively cautious. Overall, the sectors where venture capital institutions invest in unprofitable companies will probably still be mainly the Sci-Tech Innovation board and the ChiNext board.
Shanghai Securities Journal: How will the implementation of the overseas listing filing management rules impact venture capital institutions?
Zhang Wei: It is worth noting that there is a significant difference in valuation levels between different markets. Generally, the valuation level in the A-share market is higher than that in the US and Hong Kong stock markets. However, some industries' enterprises are more suitable for listing overseas to enjoy higher valuations. Venture capital institutions focus on investment returns. The choice of which market to list on is also an important reference factor for venture capital institutions when making investment decisions.
Shanghai Securities Journal: What opportunities and challenges will the implementation of the comprehensive registration system bring to venture capital institutions participating in the primary market?
Zhang Wei: Under the comprehensive registration system, the A-share market will become more transparent and market-oriented. We look forward to further clarifying the standard information regarding issuance prices, issuance sizes, issuance timing, and so on. Domestic venture capital institutions need to gradually benchmark against leading institutions in mature foreign markets and adopt more mature thinking when it comes to investment and exit to enhance their ability to discover and create value.
Shanghai Securities Journal: What areas should venture capital institutions focus on in preparation for the full implementation of the comprehensive registration system?
Zhang Wei: Leading venture capital institutions have made preparations and will adjust their investment strategies in accordance with the requirements of the comprehensive registration system:
Firstly, discovering value. Venture capital institutions need to invest even earlier, in smaller-scale projects, and in technology, which places higher demands on their ability to grasp the growth potential of enterprises. Especially when investing in early-stage tech companies, it tests their ability to understand technological development trends and the commercialization of cutting-edge technology.
Secondly, creating value. Venture capital institutions need to improve their post-investment service capabilities and further empower the companies they invest in. They need to undergo a mindset shift from merely collecting to cultivating, from fishing to fish farming, deeply cultivating industries with a few players but vast market potential, evident advantages, and accumulated experience.
Over the past year, the bull market returned, with technology leading the way.
As I said back in October 2024, the rally that began on September 24 was not merely a rebound, but a reversal. Since then, China's capital markets have undergone a broad revaluation, moving from undervaluation toward fair value.
The Shanghai Composite Index reached its highest level in a decade. The "Yi-Zhong-Tian" trio—Eoptolink, Zhongji Innolight and TFC Communication, three prominent Chinese optical communications stocks—saw their share prices multiply severalfold in a single year. Cambricon's market capitalization briefly exceeded RMB 600 billion. Elsewhere in the technology sector, triple-digit price-to-earnings ratios and valuations exceeding RMB 10 billion became commonplace.
Some investors were greedy; others, fearful. Still others asked me: Are technology stocks in a valuation bubble?
My answer is that what we are witnessing is the hunger and anxiety of an era, reflected in the capital markets. Once you understand this, the current fervor for technology investing is no longer difficult to explain.
Investment has nothing to do with macroeconomics, but everything to do with geopolitics.
China-US relations will shape the investment landscape for decades to come. Geopolitics has played a major role in shaping the hunger and anxiety of our times, fundamentally reshaping the way we invest.
What, then, lies at the heart of China's hunger and anxiety?
The Fourth Industrial Revolution is already underway, yet China has not fully overcome the technological shortcomings left by the Third. There is no time to lose.
This is why some people wonder: Why do Chinese computing chip companies command such high valuations when their technologies still lag so far behind NVIDIA's? Why does NVIDIA trade at just 50 times earnings, while a company hailed as "China's answer to NVIDIA" commands a multiple of 300?
To me, this gets the logic exactly backward.
It is precisely because these companies cannot catch up with NVIDIA in the near term that they command a higher strategic premium. The wider the technological gap, the greater the strategic value.
The further something lies beyond our reach, the stronger our hunger. The harder it is to catch up, the deeper our anxiety. If China were to achieve a complete breakthrough in computing chips one day, valuations might actually come down.
Where can one find China's most spectacular natural landscapes?
Much of the answer, I believe, lies in and around the Hengduan Mountains: the Meili Snow Mountains, Jade Dragon Snow Mountain, Mount Gongga, Mount Siguniang, Jiuzhaigou, and many others. Vast differences in elevation and deep fault lines have given rise to landscapes of extraordinary grandeur.
Hard-tech investing follows a similar logic.
Technological gaps, discontinuities in capabilities, and missing links in industrial systems: a leap in difficulty brings a leap in valuation, and a successful breakthrough can, in turn, bring a leap in returns.
This logic extends well beyond computing chips. It is equally evident in memory semiconductors, commercial spaceflight, and other sectors where China still faces substantial technological gaps with other countries.
It was precisely this conviction that led CoStone Capital, starting in 2016, to decisively focus its investments on three areas: hard tech, emerging industries, and life sciences and healthcare. In this context, "hard tech" refers specifically to important industries in which China faces a technological gap with the United States.
Thanks to this forward-looking strategy, CoStone Capital established an early presence across the full value chains of key sectors, including semiconductors, artificial intelligence, and robotics.
Looking ahead, the frontiers of technological progress and industrial upgrading are boundless. Nor can the gaps in hard technology be closed overnight. The twin windows of opportunity presented by technological innovation and the development of homegrown alternatives to foreign technologies have only just begun to open.
The road ahead is long, but the future holds immense promise.
As an investment firm, CoStone Capital will continue to invest where the hunger and anxiety of each era run deepest, move forward with the tensions that shape our times, and extend our reach toward the most challenging—and most important—frontiers.
Spring 2026