China just launched its own Nasdaq for local tech IPOs and one stock soared more than 500%
- China launched its answer to the Nasdaq and some shares surged. More than 24 stocks IPO'd.
- The Star Market was announced by President Xi last year, in the hope it will encourage domestic tech investment and Chinese businesses listing in China.
- More than 140 companies have signed up totalling $18.7 billion.
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China launched its new tech focused stock exchange today - the Star Market, in what is being seen as China's answer to the Nasdaq.
Like the Nasdaq, equities are focused on tech and science, and opening trade was met with a frenzied burst, with gains in all 25 companies making their debut, including one company rising 520% on debut.The stocks, according to Bloomberg, surged on average 140% at close, with most slipping from their highs earlier in the day.
The Star market is China's attempt to make sure they don't lose the next Alibaba or Tencent which are both traded abroad, in New York and Hong Kong, respectively.
It's been widely endorsed by top officials, and helped generate enough enthusiasm that firms raised a combined $5.4 billion, 20% more than what was planned. Over 140 companies signed up to trade, totalling more than $18.7 billion.
Chipmakers Anji and Montage Technology rose as much as 520% and 285% respectively, and four of the 25 stocks gained more than 200%.
Sharp rises are unusual in China, where stock movements are normally capped, unlike the Star Market. The Shanghai and Shenzhen exchanges permit main board stock prices to move 44% on the first day and thereafter 10%.Analysts have said that the government's backing is seen as a big pull for investors, who also must have two years of trading experience to trade, as well as 500,000 yuan ($72,686.)
Companies will be able to register without having to apply to the government regulator, ensuring greater numbers of companies will be able to be traded. Startups and other companies that haven't yet recorded a profit will also be able to be traded - a departure from what was previously allowed.