China kicks off new Shanghai tech board as it tests new ways to improve volatile stock market

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In its latest attempt to build market credibility, China on Monday launched the Science and Technology Innovation Board, or 'STAR Market,' on which 25 companies were listed.

But many investment funds are preferring to wait and see whether the new board will live up to expectations before commenting, or participating.

"China is centralized, different from the U.S. and Europe. It's a very different circumstance given the Chinese financial market evolution, but I think it is meaningful," said Andy Nybo, director at Burton-Taylor International Consulting, which conducts financial markets research. "Regulators, political forces, will try to influence and support to see it's a successful initiative.

As an experiment, the Sci-Tech Innovation Board is quite small from a relative capital perspective. Heading into Monday's launch, the 25 companies were expected to raise 37 billion yuan, according to a report by state news agency Xinhua. In contrast, the Shanghai Stock Exchange has a market valuation of $4.6 trillion, according to theThe new stock board is aimed at domestic investors, with minimal opportunity for foreign participation right now.

"And that can be quite a different market structure if I think about a securities firm how I might play, or even as an insurance company," he added.

 

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