Billionaires and ‘craziness’ as China opens Nasdaq-style index

CHINA opened a Nasdaq-style stock market for technology companies yesterday, prompting a surge in prices of more than 500pc for some firms listed on the new exchange.

The new technology board of the Shanghai stock exchange, which has been named the Star Market, opened with 25 stocks listed.

The Chinese government hopes to use the new market to encourage investment in domestic technology firms and to give them an alternative to floating in New York or Hong Kong.

The 25 stocks on the Star Market gained 160pc on average on the ex- change’s debut. Semiconductor maker Anji Microelectronics Technology closed 520pc higher.

Several analysts urged caution over the rapid price gains experienced by companies on the board.

Eugene Qian, president of UBS Securities, told CNBC that the market needs to “take a little bit of patience to develop”. Twenty-four of the companies went public for the first time and several paper billionaires were created by the soaring valuations.

More than 140 Chinese technology businesses have applied to list on the new market, which does not require government approval. Luo Huasen, chairman of Shanghai Hengsui Asset Management, said he planned to “stay on the sidelines” of the new board.

“I suspect the craziness of this market will be beyond my understanding,” he said. The board was announced by Chinese President Xi Jinping last year, and Beijing’s endorsement of the project may help it avoid the fate of previous failed attempts to create a Chinese competitor to Nasdaq.

Chinese financial regulators relaxed restrictions to launch the new market, including allowing loss-making firms to list on it.

Businesses will also be able to issue dual-class share structures, a common structure used in technology firms that helps the founders of fast-growing businesses to retain control.

The opening of the Star Market comes as China faces ongoing trade tensions with the US.

Chinese technology firm Huawei was blocked from conducting business with American suppliers because of US concerns over possible espionage uses of its products – an allegation the company denies.

Last month, Donald Trump signalled that he would relax some trade sanctions on Huawei, but kept many restrictions in place.

520pc The amount Chinese semiconductor maker Anji gained on the first day of the Star Market, China’s Nasdaq-style index