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Shining debut on Star market boosts China’s billionaires


China’s billionaires’ club has added a clutch of new members after Shanghai’s latest tech stock market generated an unprecedented rally for its first batch of listings, underlining domestic investors’ enthusiasm for the country’s answer to Nasdaq.

The 25 companies that debuted on the so-called Star market on Monday rose an average of 140 per cent in the first trading day, taking the paper value of shareholdings by three of those companies’ individual investors above $1bn each, according to the Bloomberg Billionaires Index.

Chen Wenyuan, chairman and holder of a 74 per cent stake in Suzhou HYC Technology, which produces flat-panel displays, saw the value of his stake jump 129 per cent to $2.4bn; the 68 per cent stake of chairman Cao Ji in Zhejiang Hangke Technology, a maker of battery testing equipment, shot up 99 per cent to $2.2bn; and at imaging technology company ArcSoft a 34 per cent stake held by majority shareholder Deng Hui rose 127 per cent to $1.3bn.

All three men remained billionaires even after the freshly listed Star stocks took an average drop of 8 per cent on Tuesday. The second-day falls left the Star board with a market capitalisation of about $71.5bn, down about $7bn from the previous day.

“You cannot have stocks going up 200 per cent or 300 per cent without some profit-taking the day after,” said Gerry Alfonso, a director at Shenwan Hongyuan Securities, who described Tuesday’s pullback as “quite natural”.

Beijing hopes the new board will encourage investment in domestic tech start-ups and convince more Chinese businesses to list at home rather than in the US. The Star board, personally announced by President Xi Jinping in November, is part of China’s push to counter pressure on its technology industry from Washington, which blacklisted Chinese telecoms equipment maker Huawei in May.

More than 140 technology and science companies have signed up to list their stocks on the new facility run by the Shanghai Stock Exchange with a combined fundraising goal of Rmb128.8bn ($18.7bn). The first 25 to debut this week raised Rmb37bn collectively from issuance of new shares.

The Star board is unique in China in allowing shares to trade freely for the first five days, after which they are subject to a daily cap on price movement of 20 per cent up or down. That is a far freer rein than is allowed on Shanghai’s main exchange, for instance, which caps first-day gains and losses at 44 per cent and only allows moves of up to 10 per cent thereafter.

Daniel So, Hong Kong-based strategist at CMB International, said that the huge first-day gains were a sign of “pure speculation”, and that investors should get set for “huge volatility” in coming days. “Everyone is just trying to find a greater fool,” he said.



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