China’s Nasdaq-Like Star Board Loses Luster Among Investors

04 Nov 2019, 06:07 PM IST

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China’s Nasdaq-style Star board appears to be losing its shine as investor demand sags.

The six stocks that debuted on the new tech board in Shanghai last week rose by an average 116% on day one and are heading for a mean 69% first-week gain. While this is still a stellar performance, it’s far short of predecessors’ eye-popping surges, according to data compiled by Bloomberg.

The previous 35 stocks that listed since the Star market went live in July saw an average 152% first-day rally and were up 158% after a week. Some of the companies that debuted last week, including Shanghai Haohai Biological Technology Co. Ltd. and Shenzhen JPT Opto-Electronics Co., were up less than 15% in their first week, the worst among companies that have listed so far on the board. The smallest first-week gain among the previous cohort was the 34% rise by Shanghai Bright Power Semiconductor Co.

A surfeit of stocks relative to investors might be to blame for the more muted trading of late. After reduced activity following a busy day on July 22 when the new board launched to much fanfare, new listings rebounded last week as daily trading volume had already begun to drop off.

Read more: China Speeds Up Tech Listings as Star Board Booms

Another factor hurting demand is that individual investors need at least half a million yuan ($71,162) in stock-portfolio value and two years’ trading experience to buy securities on the Star board, which limits the pool of buyers.

The Star market is China’s testing ground for new listing rules geared toward technology startups. It has scrapped limits on valuations and first-day price gains and is open to companies that are not yet profitable.

UPCOMING LISTINGS:

Hanwha Systems
- Korea exchange
- Size $345m
- Listing Nov. 14
- Citi, Korea Investment & Securities, NH Investment
S Hotels and Resorts
- Thailand exchange
- Size $236m
- Listing Nov. 12
- Credit Suisse
Changsha Broad Homes Industrial Group
- Hong Kong exchange
- Size up to $194m
- Listing Nov. 6
- China Securities, CICC
Shanghai Kindly Medical Instruments
- Hong Kong exchange
- Size up to $106m
- Listing Nov. 8
- Bocom International
Bangkok Commercial Asset Management
- Thailand stock exchange
- Size at least $700m
- Listing date TBA
- Trinity Securities, Kasikorn Securities
Sinic Holdings Group
- Hong Kong stock exchange
- Up to $287 million
- Pricing Nov. 8, listing Nov. 15
- ABC International, Huatai Financial
China Feihe
- Hong Kong stock exchange
- Size up to $1.1b
- Listing expected Nov. 13
- JPMorgan, CMS, CCB International
Bafang Electric Suzhou
- Shanghai exchange
- Size $197m
- Taking orders Oct. 30; listing date TBA
- Shenwan Hongyuan

More ECM situations we are following:

China’s cash-strapped companies are counting on the equity market for more funding, about three years after the government kicked off its clampdown on financial leverage.
Westpac Banking Corp. will raise about A$2.5 billion ($1.7 billion) in a share sale and slashed its dividend as profit slumped.
Pharmaron Beijing Co. Ltd. starts gauging investor demand for its proposed Hong Kong listing from Monday, according to terms for the deal obtained by Bloomberg.
A total of $2.2 billion was raised in overseas initial public offerings to fund 19 Chinese companies last month, according to Bloomberg calculations.
After months of work, Citigroup Inc. was absent from Chinese real estate website Fangdd Network Group Ltd.’s $78 million U.S. public offering after a dispute over fees, according to people familiar with the matter.