FILE PHOTO: A sign for the STAR Market, which is China’s new Nasdaq-style and tech, the board of directors shall be given after the closing ceremony of the first batch of companies on the Shanghai Stock Exchange (SSE) in Shanghai, China, on July 22, 2019. REUTERS/Stringer/File Photo
SHANGHAI (Reuters) – Corporations in China’s new Nasdaq-style stock market retreated on Tuesday, with the shedding of some of the vast profits made on their volatile debut album, in the last session, but all remained well above their offer prices.
In 24 of the 25 companies on the Shanghai Stock Exchange-STAR Market opened lower, the break of four companies managed to post gains, led by Espressif Systems (Shanghai) Co., a maker of wireless communications chips, which jumped 15.1%.
China Railway Signal & Communication Corp. (a) of the sharp fall in the morning session, dropping 16.1 percent of the lunch hour, after having fallen by more than 22%. The company’s shares continue to be 76% higher than the initial public offering price.
Yuan Yuwei, fund manager at Olympus, Hedge Fund Investments, Co., told the STAR-ratings may continue to be frothy in the short-term, but the fact that he is expecting to see declines over the next two to four weeks. On Monday, stocks posted average gains of 140%.
“This has been a serious bubble,” he said. “The ratings do not support the fundamentals. Frothy valuations in the benefit of the large shareholders and private investors, it will be burned up.”
Yuan also said that he hoped that the regulators could not intervene in the market, and let market forces have their role to play.
The power of the Market for the first time on Monday and saw a number of stocks to climb by as much as 520% or more, and has more than doubled, and the board of directors of the combined market capitalization, surpassing even the expectations of seasoned traders.
The data from the Shanghai Stock Exchange showed a margin loan to the turbo trading on Monday, with banks and investors to lend a total of 1.51 billion yuan ($219.38 million), to boost their purchasing power.
Report by Andrew Galbraith and Samuel Shen; Additional reporting by Luoyan Liu; Editing by Kim Coghill and Sam Holmes