Across The Border | ChiNext sinks further into the doldrums amid lacklustre company earnings
The board that was meant to be China’s answer to the Nasdaq has never delivered on its early promise. Now things are going from bad to worse
It was meant to be China’s answer to the US’ Nasdaq exchange, brimming with ambitious technology start-ups vying to become the next Microsoft or Netflix.
But unfortunately, the mainland’s tech-heavy ChiNext market is yet to fulfil its early promise and has been losing its lustre with investors amid a slump in its constituents’ earnings.
Eight of the 10 largest companies trading on the board at the Shenzhen Stock Exchange have warned of either profit declines or losses during the first half of this year, pouring cold water on investors’ hopes of discovering a future gold mine.
The second board – China’s own Nasdaq – will eventually be abandoned by investors, with not a single established tech behemoth coming into existence
Guangdong Wens Foodstuffs Group, the largest ChiNext-listed firm by capitalisation, said in a filing to the exchange that its first-half earnings may have fallen by as much as 78 per cent to 1.6 billion yuan (US$235 million), from 7.2 billion yuan in the same period a year earlier.
As of Tuesday, its shares had sunk 16.8 per cent to 19.88 yuan in a losing streak of eight straight trading sessions. That made the company’s total market capitalisation 103.8 billion yuan on Tuesday.
Leshi Internet Information and Technology, a video-streaming service provider under billionaire founder Jia Yueting’s debt-ridden LeEco group of companies, warned investors of potential losses of up to 642 million yuan between January and June. It’s the first time the firm has reported interim earnings in red ink since its trading debut in August 2010.
Trading of Leshi’s shares is currently suspended. It was valued at 61.2 billion yuan on April 14, the last trading day before the suspension came into effect.