The 25 new shares on the STAR Market surged during the morning session on Monday, showing investors’ high expectations of China’s new Nasdaq-listed board.
By 11am, the 25 shares jumped 140 percent to 450 percent compared with initial public offering prices. Some shares have been temporally halted for trading for 10 minutes to “cool down” after surging 30 percent.
That was in contrast to the mainstream Shanghai trading board, where price gains are capped at 44 percent on debut days and trading swings are limited to 10 percent a day for the duration of trading.
The no-limit price will last for the first five trading days, according to the rules of the new STAR Market.
Anji Technology Co, a semiconductor materials company, led the surge among the 25 firms. It surged 450 percent by 11am, with an intra-day high jumping over 500 percent.
China Railway Signal & Communication Group, which offers communications systems for railway networks, led the trade volume among all new shares. It gained 160 percent, climbing to 15.21 yuan (US$2.20) by 11am, compared with its 5.85 yuan IPO price.
The new shares jumped despite relatively high IPO valuations — the IPOs were heavily oversubscribed among retail investors.
The average price-to-earnings (PE) ratio of the 25 firms was 53 times their 2018 earnings. By comparison, the PE ratios of previous IPOs on mainstream Chinese boards were no greater than 23.
Compared with PE, investors should focus more on a company’s research spending and innovation, which represents long-term development, analysts said.
ArcSoft, which offers AI services and solutions, spends about 32 percent of revenue on research, the highest among the 25 firms. It jumped 169 percent to 77.3 yuan during the morning session.