Is Star Market, Xi Jinping’s pet project to boost tech fundraising, just another casino for excitable stock market punters?
- Many small investors who chased early gains came unstuck when the frenzied rally that sent the shares skyrocketing ran out of steam
- After a week of unrestricted trading, strict limits on share-price movements kick in next week for the tech innovation board
Seventy-year-old Jiang Guangyuan was bursting with confidence as he watched his shares on Shanghai’s Technology and Innovation Board surge to dizzy heights on Monday morning.
Having bought them immediately after trading began, it appeared his faith in the Star Market, as China’s answer to the Nasdaq is also called, had been handsomely rewarded as the share price of Western Superconducting Technologies and its 24 fellow debutants skyrocketed.
He had every reason to hope the rally would continue for the whole week. After all, the sky was the limit during those opening five days of unimpeded trading before restrictions designed to minimise volatility kick in on Monday.
But the party was over almost before it started. By Friday Jiang – and many other early Star Market investors – was licking his wounds after seeing the shares tumble from their day-one highs as the early promise of a market perceived as a potential launch pad for China’s own versions of Microsoft and Apple turned to dust.
This is a new market under President Xi Jinping’s directions, and it will be a disgrace if a boom-to-bust cycle happens right after the inauguration
“As a seasoned stock investor with more than 20 years of experience, I believed that shares of the companies would keep rising for at least five days when they started trading,” said Jiang, the former manager of a state-owned company in Shanghai. “I am currently stuck with paper losses, but still believe that the losses can be recovered in the near future.”
Jiang is one of the 4 million individual investors eligible to buy and sell stocks in the much-heralded new market. Like many others, he had not been able to get his hands on shares at the IPO stage, such was the enormous demand amid giddy expectations for the debutant start-ups. So he did what he thought was the next best thing and bought his shares soon after launch, chasing the early rally.