Beijing’s small and medium-sized companies are bucking the broader slump in local equities and are on track to enter a bull market. The Beijing Stock Exchange 50 Index, which tracks early-stage innovative firms listed in the capital, rose by 3.1% on Monday, marking a significant increase from its 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 standout performer this quarter.

The strong rebound on the Beijing board this month can be attributed to several factors. Firstly, the 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 contributed to growth in this area of the market.

Investors seem to be taking notice of these companies, with 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 expanding China’s financial markets. Overall, these companies appear to be well positioned for continued growth and success in the future.