The story appears on

Page A10

July 24, 2019

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business

STAR board reverses 1st-day gains

The biggest shareholders in China’s new STAR Market lost a combined US$1 billion on the second day of trade yesterday, a day after the board’s roaring debut created three new billionaires.

All but four companies of the 25 stocks listed on the market fell as investors took profits from opening-day gains, erasing about 9 percent of the total market capitalization.

The new board roared out of the gates on Monday, with some shares surging as much as 520 percent. Frenzied buying more than doubled the board’s total capitalization from 225 billion yuan (US$33 billion) to 529 billion by the end of the day.

While the size of the moves on day two paled in comparison, the declines were sharp enough for STAR’s five biggest individual shareholders, including Monday’s newly minted billionaires, to lose a combined 6.94 billion yuan on paper, according to Reuters calculations.

Falls were led by China Railway Signal & Communication Corp, which sank 18.4 percent, the sharpest drop of the day. But even after that drop, its shares were 71 percent higher than their initial public offer price.

Espressif Systems (Shanghai) Co, a maker of wireless communication chips, led the day’s gain, rising 14.2 percent.

Created to echo the tech-heavy Nasdaq, the Shanghai Stock Exchange STAR Market is intended to be both a driver of capital market reforms and a way to promote home-grown technology companies.

To give market forces a greater role in setting prices, trading rules are looser than other Chinese markets. There are no daily price limits in the first five days of trade in new stocks.

Although the STAR Market serves as strategic deployment for national financial reform, it will still experience rounds of market volatility and irrationality in the early stages,” Lynda Zhou, China equities chief investment officer and portfolio manager of Fidelity International, said.

“Even institutional investors need to remain calm and return to the fundamentals of investment,” she said.

The market’s debut, which saw stocks post average gains of 140 percent, exceeded even the expectations of veteran traders who are used to wild swings in the country’s biggest stock markets.

Data from the Shanghai Stock Exchange showed margin loans turbocharged trading on Monday, with investors borrowing a total of 1.51 billion yuan to boost their buying power.

There is no index at present for tracking the STAR Market but the Shanghai Stock Exchange said it will launch one on the board’s 11th trading day, following the debut of its 30th company.

However, Shanghai stocks rose yesterday as market sentiment was lifted after China’s Ministry of Industry and Information said it will give more support to the industrial sector.

The Shanghai Composite Index rose 0.45 percent to end at 2,899.94 points.

Shares of telecommunication firms, electronics enterprises and automobile companies were among the biggest gainers yesterday.

The ministry said yesterday that the country will further promote high-quality development of manufacturing sector, with enhancing innovation capability, industrial structure optimization and upgrade, supporting small and medium-sized enterprises and other measures.


Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend