China today saw a dramatic launch to its new tech-focused stock exchange – the Star Market – in what is being seen as China’s answer to Nasdaq.
Like Nasdaq, equities on the Star Market are focused on tech and science, and opening trade was manic, with rapid increases and gains in all 25 companies making their debut, including microelectronics company Anji, which rose by 520 percent, and Montage Technology, which saw a 285 percent lift.
As the day settled, stocks were still up, surging 140 percent on average at close. Overall, four of the 25 stocks were up more than 200 percent at close, with 16 stocks up more than 100 percent.
These dramatic rises are completely unique in China, where stock movements are capped within a range demarcated by the authorities, but the Star Market, run by the Shanghai Stock Exchange, has no limits on share price movements during a stock’s first five days.
The market has been enthusiastically supported, generating so much interest that more than 140 companies have signed up to eventually trade, raising more than $18.7 bn in the process.
The Star Market was announced by President Xi Jinping in November last year and is China’s explicit attempt to make sure it does not lose the next Alibaba, which opted to trade in New York. The government’s backing is seen as a big factor for investors. Xi said the exchange would ‘support Shanghai in cementing its position as an international financial center and a hub of science and innovation’.
Companies will be able to register without having to apply to the government regulator, ensuring greater numbers of companies will be able to be traded.
Start-ups and other companies that haven’t yet recorded a profit will also be able to trade – a big departure from what was previously allowed and another big contributing factor to companies being able to list.