Warning on rush to tech stocks
Official media has warned mainland investors against rushing headlong into the speculative frenzy of Internet stocks, just as the fever is catching on in the mainland.
In a front page commentary, the Shanghai Securities News said investors should be aware of the huge risks in the Internet sector and be extremely careful when making investment decisions.
'The Internet is a new area, and traditional valuations have become irrelevant,' the paper said.
The warning comes as the mainland's Internet companies have been enjoying a meteoric rise in their share prices, propelled by expectations of future prospects rather than any profitability records.
Attracted by the promising outlook of the industry, a growing force of listed companies have jumped on the Internet bandwagon, as the global trend spreads fast in the mainland.
More than 30 listed companies announced their Internet ventures last month, following the lead of another 30 fellow counters that had moved into the sector in the fourth quarter of last year, the paper said.
There have been concerns that wild speculation may dampen Beijing's efforts to finance its state-sector reforms through stock market listings.
Investors were undeterred yesterday, with the Shanghai A-Share Index gaining 2.47 per cent to 1,739 points, while the Shanghai B-Share Index rose 1.22 per cent to 38.13 points.
In Shenzhen, the increases were mirrored. The Shenzhen A-Share Index advanced 2.83 per cent to 543.56 points, while the Shenzhen B-Share Index improved 2.1 per cent to 84.72 points.
Meanwhile, the Guangzhou Daily reported that the China Securities Regulatory Commission would not set daily limits on the price movements of stocks traded on the planned boards for technology stocks.
The main board shares are subject to 10 per cent daily limit gain or decline.
Under the proposed rules, companies aiming to list on technology boards would be required to have profits for one year, against the three years required for a mainboard listing.
Companies must also have minimum registered capital of 30 million yuan.
The newspaper said 70 firms had obtained verification from the Ministry of Science and Technology and the Chinese Academy of Sciences, from more than 1,000 companies in the queue.