Shares on Shanghai’s new Nasdaq-style technology board soared Monday, with one firm rocketing more than 500 percent, as investors rushed to grab a piece of China’s latest market liberalisation in a frenzied debut.
All 25 components on the Shanghai Stock Exchange’s Sci-Tech Innovation Board, or STAR Market, were driven sharply higher in a hearty initial endorsement of China’s plan to use the board to help fund fast-growing tech firms and discourage them listing abroad.
Anji Technology, a solar energy battery manufacturer, closed morning trade up 415.44 percent at 202 yuan after earlier soaring as high as 520 percent.
The board’s biggest component, China Railway Signal & Communication, rose 125.64 percent to 13.20 yuan on market-leading turnover of 7.6 billion yuan ($1.1 billion).
The introduction of the board, for which listing and trading rules have been dramatically eased, represents one of China’s most significant financial market reforms yet and a potential weapon in its growing tech rivalry with the United States.
The tech board is yet to draw any household names.
But China hopes it will eventually include listings from among the country’s rich stable of tech “unicorns” — start-ups valued at a minimum $1 billion — which include Alibaba-linked mobile-payments pioneer Ant Financial, ride-sharing giant Didi Chuxing, and online-services platform Meituan-Dianping.
China’s government envisions the board being mentioned in the same breath someday as the tech-heavy Nasdaq, encouraging firms to list at home after the likes of Alibaba and Baidu chose Wall Street.
That will take time — the Nasdaq has more than 3,000 companies listed and is one of the world’s biggest exchanges.
“I think the science and technology board will develop into a major and important sector in China’s capital markets, but it will take a long time, maybe 10 years, 20 years, or even longer,” said Jiang Liangqing, a fund manager at Ruisen Capital Management.
– Leap of faith –
It is a leap of faith for China’s volatility-averse authorities, as its stocks have been given relatively free rein.
For the first time, Chinese companies can list without a track record of past profits or restrictions on IPO pricing.
There will be no limits on price movements for the first five days of trading, after which a daily 20 percent band is imposed.
China’s two main exchanges in Shanghai and Shenzhen are subject to a 10 percent band to contain volatility.
With attention on the new exchange, those markets languished Monday. Shanghai’s main index was 0.57 percent lower at midday while Shenzhen’s was down 0.87 percent.
The tech board was announced in November by President Xi Jinping as a battle with the United States for technological supremacy heated up.
Xi has called on China’s tech leaders to become global champions, while the US has fought back in part by taking steps to clip the wings of Chinese telecom giant Huawei.
When big tech companies list overseas, the government in Beijing loses influence over their fundraising and Chinese investors cannot share in those companies’ success due to restrictions on purchasing overseas-listed shares.
China realised it needed to loosen up.
“If China didn’t launch this new tech board now, it would miss the chance to transform its economic development into this ‘new economy’ mode,” said Yang Delong, chief economist at First Seafront Fund.
But there are concerns that the new board could siphon liquidity from China’s main markets, already pressured by slowing economic growth and the US trade war.
As a result, analysts believe regulators will take a measured pace in growing the tech board.
“The (main) markets are in a downturn now and if giant companies list on the tech board initially, market capital will be diverted. The market cannot bear that,” said Yang.
“The new board won’t drain too much from the main boards.”
Russia reacts with anger after doping ban from Olympics, World Cup
The World Anti-Doping Agency on Monday banned Russia for four years from major global sporting events including the 2020 Tokyo Olympics and the 2022 World Cup in Qatar over manipulated doping data, prompting an angry response from President Vladimir Putin.
WADA's executive committee, meeting in Lausanne, handed Russia the "robust" four-year suspension after accusing Moscow of falsifying data from a doping testing laboratory that was handed over to investigators earlier this year.
The toughest ever sanctions imposed on Russian state authorities will see government officials barred from attending any major events, while the country will lose the right to host or bid for tournaments.
Chilean military plane disappears with 38 aboard: Air Force
A Chilean military plane with 38 people aboard has gone missing after it took off from the country's south for a base in Antarctica and is presumed to have crashed, authorities have said.
Seventeen of those on board the C-130 aircraft were crew and the others were passengers, Chile's air force said Monday.
The plane is believed to have crashed and "all national and international air and maritime means available in the area are continuing the search (for survivors) in the sector where communications were lost with the aircraft," it added in a statement Tuesday.
Two impeachment articles expected against President Trump: reports
Democrats are expected to announce on Tuesday two articles of impeachment against Donald Trump, US media reported Monday evening, after laying out their case at a hearing against a president they branded a "clear and present danger" to national security.
The articles will focus on abuse of power and obstruction of Congress, The Washington Post said, citing three official familiar with the matter.
It added that the full House of Representatives would vote on the articles next week, ahead of a trial in the Senate.
CNN said a third article on obstruction of justice was still being debated, and the network's sources cautioned that plans were still being finalized.