SHANGHAI: Trading on China's new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday , with shares up as much as 520 per cent in a wild debut that more than doubled the board's combined market capitalisation and beat veteran investors' expectations.
Modelled after Nasdaq, and complete with a USstyle IPO system, STAR may be China's boldest attempt at capital market reforms yet. It is also seen driven by Beijing's ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the cross-fire. Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.
Looser trading rules were aimed at"giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency," the Shanghai Stock Exchange said in a statement on Friday. SSE said that an index tracking the STAR Market would be launched on the 11th trading day following the debut of the 30th company on the board.Investor focus on the STAR Market in the short term could weigh on the main board in terms of liquidity and attention, said Zhu Junchun, chief analyst with Lianxun Securities.
Huang at Shanghai See Truth suggested rational investors wait on the sidelines and observe the market for a month, before making purchasing decisions.