Stocks Surge on China’s New Nasdaq-Like Market

SHANGHAI—China’s new market for homegrown technology companies opened with a bang, with stocks doubling, tripling or more than quadrupling in value on its first day.

The Shanghai Stock Exchange’s Science and Technology Innovation Board—dubbed the STAR market by Chinese authorities—is a pet project of President Xi Jinping, part of Beijing’s effort to revitalize a slowing economy and sharpen its edge in the fight for global tech dominance.

On Monday, 25 companies that recently completed initial public offerings started trading on the new venue, and climbed between 107% and 415% by midday. Historically, stocks of newly listed companies on the main exchanges in Shanghai and Shenzhen have been limited to first-day gains of 44%, but that cap isn’t imposed on the new board.

Anji Microelectronics Technology


688019 440.95%

(Shanghai) Co., a manufacturer of semiconductor products, was the best performer. Medical instrument maker Shanghai MicroPort Endovascular MedTech Co. was next-best, surging 283%. The weakest performer was printing-equipment maker Xi’An Bright Laser Technologies Co., up 107%.

Anji Microelectronics rose so fast that it triggered two 10-minute-long trading halts in the morning session, first at 30% above the opening price and the second at 60%. The new board has circuit breakers in place when stocks increase or fall rapidly.

“It’s a bit crazy but I think the situation will calm down a bit in the next few days,” said Jack Zhang, an analyst at BOC International, saying the country’s speculation-prone individual investors appear to be the driving force on the first day.

Since March, more than 149 companies have applied to list on the STAR market, including software and robotics makers and biotech companies. China’s securities regulators so far have approved 28 listing applications following exchange reviews, with 25 having completed their IPOs.

The 25 raised a combined 37 billion yuan ($5.4 billion) and had an average trailing price-to-earnings ratio of 53.4 times.

Beijing has high hopes that the new marketplace eventually could compete with Nasdaq in nurturing innovative startups and tech companies. Over the years, dozens of Chinese companies—including e-commerce giant

Alibaba Group Holding
Ltd.

and smartphone maker

Xiaomi
Corp.

—went public in the U.S. or Hong Kong, in part because they couldn’t meet tough listing standards at home.

The tech board will test rules changes meant to make it easier for technology companies to raise capital for growth and investment. It is open to unprofitable companies in certain industries that are barred from going public on the Shanghai exchange’s main board. Companies already listed in Hong Kong can also list there.

The STAR market is Beijing’s third attempt to come up with an answer to Nasdaq, following disappointing experiments with Shenzhen’s ChiNext board and Beijing’s “new third board,” an over-the-counter market. Market value and trading volume on both venues have dwindled in recent years.

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