China’s new Star Market turns dozens of founders into overnight billionaires, while some small investors nurse heavy losses
- Chen Wenyuan, the 50-year-old chairman of Suzhou HYC Technology, is the biggest winner, with his holding in the company now worth US$3 billion
- Frenzied buying has created at least 30 yuan-denominated billionaires among those who already owned pre-IPO stakes in newly listed companies
Some small investors may be nursing losses after taking a punt on China’s new board for technology companies, but many of the senior executives of the listed start-ups are celebrating a windfall.
The frenzied buying that has fired up the stock prices by an average of 200 per cent since trading began on the Star Market two weeks ago has created at least 30 yuan-denominated billionaires among those who already owned pre-IPO stakes in the companies. Someone with a fortune of 1 billion yuan is worth US$144 million.
The first batch of 25 companies on the mainland’s Nasdaq-style market posted a stellar average gain of 140 per cent in the first trading week when shares were allowed to change hands freely without daily limits. The stocks continued to advance another 32 per cent on average in the second week, when they were subject to a 20 per cent daily trading cap.
“The market has enabled many people to become super rich overnight given investors’ keen interest in owning shares of their companies,” said Zhou Ling, a hedge fund manager with Shanghai Shiva Investment. “But they certainly will face pressure to develop their firms into China’s own technology giants to live up to investors’ expectations.”
The Shanghai Stock Exchange has yet to compile an index to track the Star Market, also known as the Technology Innovation Board.
