The STAR market, Shanghai Stock Exchange's Nasdaq-style technology board, started trading on Monday (July 22) with shares of the first batch of 25 companies skyrocketing on their debut day.
Star-listed companies -ranging from chip-makers to biotech and AI firms- posted average gains of 140%, raising more than 37 billion yuan ($5.4 billion) from their initial public offerings.
Some shares of the 25 Star Market debutants climbed as much as 520% and more than doubled the board's combined market capitalisation.
Trading in Anji Microelectronics Technology (Shanghai), a semiconductor manufacturer, had to be suspended for 10 minutes at 10.20 am after the stock soared by 404% to 197.6 yuan from its offering price of 39.19 yuan. By the midday break, the company's shares were 415% higher than their IPO price, having been up 520% at one stage. By the close, Anji's shares were at 196.01 yuan, 400% higher than their IPO price.
Only three of the 25 stocks didn’t hit a circuit breaker-designed to calm frenzied buying- causing trading to be automatically suspended for 10 minutes, with 14 being paused due to a rise of 30 per cent from their opening price and eight being paused after falling 30 per cent.
Unveiled last November by Chinese President Xi Jinping and officially launched on June 13, the STAR-the Science and Technology Innovation Board- is part of China's bid for becoming the dominant player in the technologies of the future.
The country's top securities regulator says the new Shanghai market will welcome innovative companies in industries with major growth potential, such as next-generation information technology, smart manufacturing, aerospace, new materials, renewable energy and biotech.
Beijing hopes STAR will attract Chinese tech giants like Alibaba, Tencent, Xiaomi and Baidu currently trading overseas and help China's high-tech companies tap into vast wealth held by local investors.
About four million qualified retail investors with no less than 500,000 yuan in investment capital have registered to trade shares on the new STAR market, according to China Business News.
In a first for China, the STAR market allows the listing of unprofitable companies. It also allows listings of companies with dual-class shares or weighted voting rights and waives the cap on IPO prices. The new market has no daily trading limits in place for the first five days of trading but companies will be subject to a 20 per cent limit from the sixth day of trade.
More than 100 companies have applied to raise funds on the new market according to the Shanghai stock exchange.
Will the launch of Star Market which presents a new funding platform for Chinese startups amid the US-China trade war lead to an escalation in competition between exchanges in mainland China, Hong Kong and abroad? In the world of markets, as Heraclitus has said "the only thing that is constant is change.”