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Saturday 31 October 2009
Nasdaq-style board opens with a bang
All 28 firms on ChiNext in Shenzhen close way above IPO prices ChiNext, which opened yesterday, is expected to give small- and medium-sized companies access to financing and encourage private firms and venture capitalists to back start-ups.
All 28 firms on ChiNext in Shenzhen close way above IPO prices
AFP 31 October 2009
SHANGHAI: Shares soared in a wild first day of trading on China’s long-awaited Nasdaq-style board yesterday, with all 28 listed small- and medium-sized firms rocketing on fevered interest from investors.
Trading in all shares on the ChiNext in the southern boom town of Shenzhen had to be suspended at least once as market circuit-breakers, in place to curb rampant speculation, were tripped.
Chengdu Geeya Technology Co, which makes digital television decoder boxes, posted the biggest gain of the day, finishing up 209.73 per cent from its initial public offering (IPO) price of 35 yuan.
Anhui Anke Biotechnology (Group) Co closed at 50.08 yuan, up nearly 200 per cent from its IPO price. Movie production house Huayi Brothers Media Corporation soared 147.76 per cent from its IPO price of 28.58 yuan to close at 70.81.
All counters were up at least 75 per cent from their IPO prices in their debut.
‘The wild ride was expected just as it happened on the opening day of the Nasdaq,’ said Mr. Wu Dazhong, an analyst at Shenyin Wanguo Securities.
‘These companies need to find their real values on the new market. I don’t think the upward momentum will be sustained too long into the future.’
ChiNext is expected to give small- and medium-sized companies access to financing and encourage private equity firms and venture capitalists to back start-ups.
Regulators hope the new growth enterprise market (GEM) will help fuel young companies and other firms with high- growth potential in the world’s third-largest economy, following the example of Wall Street’s Nasdaq.
But there have also been worries that the new board may divert funds from the main boards and drag down stock prices. The Shanghai bourse closed up 1.2 per cent yesterday.
Mr. Yu Zuojie, an analyst with Shanghai Securities, said he expected calmer trading in the coming days. ‘Performance of the GEM stocks will be more diversified next week and the board is unlikely to stage another sharp rise,’ he said.
The first 28 companies to list on the board, ranging from software to medical equipment makers, raised about 16 billion yuan (S$3.3 billion) in their IPOs - more than double initial forecasts.
The China Securities Regulatory Commission is due to meet on Monday to consider IPO applications from three more companies.
Commission chairman Shang Fulin last week cautioned investors to trade on ChiNext in a ‘rational’ way, recognising that start-up stocks have potential for strong growth but are also characterised by unstable financial results and higher risks of irrational and speculative trading and market manipulation.
Mr. Neil Katkov, senior vice-president for Asia at global financial consultancy Celent, said ChiNext could have a troubled start, but predicted success in the long run.
‘In the short run, the venture board is going to be a bumpy ride - good for traders that thrive on volatility, but scary for buy-and-hold investors,’ Mr. Katkov said.
‘In the long run, the fundamentals of China’s growth economy mean the exchange stands a good chance of fulfilling its stated purpose of driving the development of new economy sectors such as infotech and biotechnology.’
1 comment:
Nasdaq-style board opens with a bang
All 28 firms on ChiNext in Shenzhen close way above IPO prices
AFP
31 October 2009
SHANGHAI: Shares soared in a wild first day of trading on China’s long-awaited Nasdaq-style board yesterday, with all 28 listed small- and medium-sized firms rocketing on fevered interest from investors.
Trading in all shares on the ChiNext in the southern boom town of Shenzhen had to be suspended at least once as market circuit-breakers, in place to curb rampant speculation, were tripped.
Chengdu Geeya Technology Co, which makes digital television decoder boxes, posted the biggest gain of the day, finishing up 209.73 per cent from its initial public offering (IPO) price of 35 yuan.
Anhui Anke Biotechnology (Group) Co closed at 50.08 yuan, up nearly 200 per cent from its IPO price. Movie production house Huayi Brothers Media Corporation soared 147.76 per cent from its IPO price of 28.58 yuan to close at 70.81.
All counters were up at least 75 per cent from their IPO prices in their debut.
‘The wild ride was expected just as it happened on the opening day of the Nasdaq,’ said Mr. Wu Dazhong, an analyst at Shenyin Wanguo Securities.
‘These companies need to find their real values on the new market. I don’t think the upward momentum will be sustained too long into the future.’
ChiNext is expected to give small- and medium-sized companies access to financing and encourage private equity firms and venture capitalists to back start-ups.
Regulators hope the new growth enterprise market (GEM) will help fuel young companies and other firms with high- growth potential in the world’s third-largest economy, following the example of Wall Street’s Nasdaq.
But there have also been worries that the new board may divert funds from the main boards and drag down stock prices. The Shanghai bourse closed up 1.2 per cent yesterday.
Mr. Yu Zuojie, an analyst with Shanghai Securities, said he expected calmer trading in the coming days. ‘Performance of the GEM stocks will be more diversified next week and the board is unlikely to stage another sharp rise,’ he said.
The first 28 companies to list on the board, ranging from software to medical equipment makers, raised about 16 billion yuan (S$3.3 billion) in their IPOs - more than double initial forecasts.
The China Securities Regulatory Commission is due to meet on Monday to consider IPO applications from three more companies.
Commission chairman Shang Fulin last week cautioned investors to trade on ChiNext in a ‘rational’ way, recognising that start-up stocks have potential for strong growth but are also characterised by unstable financial results and higher risks of irrational and speculative trading and market manipulation.
Mr. Neil Katkov, senior vice-president for Asia at global financial consultancy Celent, said ChiNext could have a troubled start, but predicted success in the long run.
‘In the short run, the venture board is going to be a bumpy ride - good for traders that thrive on volatility, but scary for buy-and-hold investors,’ Mr. Katkov said.
‘In the long run, the fundamentals of China’s growth economy mean the exchange stands a good chance of fulfilling its stated purpose of driving the development of new economy sectors such as infotech and biotechnology.’
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