Stellar’s debut on China’s Nasdaq-style board adds a $44 billion market cap

SHANGHAI (Reuters) – Trading on China’s new Nasdaq-style board for domestic tech companies have hit a fever pitch on Monday, sending its shares to a whopping 520%, an increase in the firms total value of $44 billion, and to exceed the expectations of knowledgeable and experienced investors are braced for a wild ride.

Shanghai’s y Secretary Li Qiang (centre, L) and the China Securities Regulatory Commission (CSRC) Chairman Yi Huiman (centre R) attend the listing ceremony of the first batch of companies in the STAR Market, which is China’s new Nasdaq-style tech to the board of directors of the Shanghai Stock Exchange (SSE) in Shanghai, China, on July 22, 2019. REUTERS/Stringer

Sixteen of the first batch of 25 companies, ranging from chip makers, health care companies, and more than twice as much as their frothy initial public offering (IPO) prices on the STAR Market managed by the Shanghai Stock Exchange.

The companies have racked up average gains of 140% in a rough first day on the market, which stumbled in the exchange’s circuit breakers are designed for calming down the frantic activity. The day’s weakest performer, leapt to 84.22%. In total, the day saw the creation of approximately 305 billion yuan ($44.3 billion) in new, market capitalisation, according to Reuters’ calculations.

“The price increases have been even more weird than I had expected,” said Stephen Huang, the vice-president of Shanghai to See the Truth, and Investment Management. “These are great companies, but valuations are too high. She is now is not good at all.”

Modeled after the Nasdaq stock exchange, and the complete U. S style, M-system, the STAR of China’s most daring attempt in the capital, and the reform of the market. It is also driven by Beijing’s ambition to become a technologically self-sufficient as a long-term trade war with Washington and catches of the Chinese tech firms are in the cross-fire.

The trade in Anji microelectronics Technology (Shanghai) Co., Ltd. (688019.SS), a semiconductor company, was briefly interrupted twice, when the company’s shares hit a two machines, the first with an increase of 30%, after climbing 60% of the market.

The mechanisms for doing very little in order to keep track of Anji, shares, check-in, when they rose to as much as 520% of the initial public offering price in the morning session. Anji shares finished the day up-400.2% of the initial public offering price is the maximum profit, giving the company a valuation of nearly 242 times 2018 earnings.

Master Of Harmontronics Automation Technology Co., Ltd. (688022.SS), on the other hand, lead to the circuit breaker is in the opposite direction, falling to 30% of the market is open from the beginning of the market to rebound. However, the market is in the vicinity of the issued shares of the company were 94.61% higher than that of the initial public offering price.

Wild share swings, partly as a result of the individual rules of the market, it had been widely expected. The Ipo was oversubscribed by an average rate of about 1,700 times less than the private investors.

The power of the Market does not set limits to the stock price during the first five days of trading. That compares with a maximum of 44% for the first time on the other boards is in China.

In the subsequent trading sessions, shares in the new tech, the board of directors will be permitted to increase or decrease up to 20% in a single day, double the 10% daily limit at the other forums.

Regulators last week warned individual investors against “blind” to the purchase at the STAR Market shares, but said the changes were good.

Relaxed trade rules were designed to “give the players enough freedom in the game, it will accelerate the formation of the equilibrium prices, and the promotion of price-setting, efficiency, and the” Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SE added that it was normal to have large fluctuations in the new tech stocks, as these companies usually have uncertain prospects are difficult to evaluate.

The exchange cited the large fluctuations in the Ipo of the company shares on the Nasdaq stock exchange and the Hong Kong stock exchange, and, in particular, the single was recently listed electric car company Nio Inc. (NIO) and the Chinese start-up, Luckin Coffee along with IT.D).

SW said that an index tracking the STAR Market, will be launched on the 11th business day after the debut of the 30th company on the map.


Investors are focusing at the STAR Market in the short term, weighing on the main board of the directors, in terms of liquidity and attention, said Zhu Junchun, chief analyst with Lianxun Securities.

This effect was evident on Monday, with the benchmark Shanghai Composite Index .SSEC falling 1.27%, while the blue-chip CSI300 index .CSI300 ending 0.69 percent lower.

Dual-listed China Railway Signal & Communications Corporation Ltd. (688009.SS), (3969.HK: clearly, the gap in the enthusiasm of the investors. The STAR of the market share has more than doubled from the IPO price, even as its Hong Kong shares fell 11.7% after a worse-than-expected interim results.

Huang at the Shanghai to See the Truth, suggests that rational investors are waiting on the sidelines and observe the marketplace for one month, and to make decisions.

Slideshow (3 Images)

Some investors, however, will be greeted with the debut of its board of directors, which Beijing hopes will propel the investment in the sector and help the country to innovate and compete in the global marketplace.

Yang, Tingwu, deputy general manager at Tongheng an Investment, a hedge fund house in the Fujian province of china, he said, given that 80% of the listed companies as “cannon fodder”, but it’s likely that the remaining 20% of its total production, China’s the next Tencent (0700.HK or Smartphone created as a result of this, the market is worth the effort.

“The night Market will be opening a new chapter in china’s stock market. Here’s to the Chinese dream come true in the capital markets!”, “he told me.

Additional reporting by Luoyan Liu, and Winni Zhou; Editing by Jacqueline Wong

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