Beijing will expand major reforms in its young Nasdaq-style tech board to its main exchanges, removing caps on the first day of trading of new stocks, allowing stocks to make bigger daily moves and speeding up the process for new companies to go public. In comments Sunday to state-run media outlet Xinhua, Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), said the liberalisation steps on the three-month old Star Market technology innovation board proved successful. That led the regulator to believe it could loosen restrictions in the broader mainland markets. It was unclear from the Xinhua report when the changes will take place. “Based on the running of the (Star) Market since it was launched, the reform measures have turned out to be successful so far,” he said. “We believe that the Star Market will eventually generate great technology companies after a certain period of time.” China has experimented with volatility curbs since its markets melted down in 2015, wiping out US$5 trillion in market value. Is Star Market, Xi Jinping’s pet project to boost tech fundraising, just another casino for excitable stock market punters? Currently, stocks on their first trading day on the main stock exchanges in Shanghai and Shenzhen are restricted to a 44 per cent gain. After that, like other stocks, they are allowed to rise or fall by no more than 10 per cent. But on the Star Market – which President Xi Jinping created to spur growth of start-ups, including those that have yet to post profits – stocks can rise or fall essentially without limits in their first week of trading. After that, they are restricted to 20 per cent daily gains or losses. The listing process is easier on the experimental Star Market as well. China STAR Market stocks lose trader interest as ‘temporary craziness’ wears off, curbs kick in “The remarks show that the regulator is comfortable with the (Star) Market movement so far and feels the valuation of the companies is acceptable,” said Ding Haifeng, a consultant with Integrity, which provides financial consulting services in Shanghai. “But it will take some time before the new IPO mechanism is copied to the overall market due to risk concerns.” Skyrocketing STAR board drags down broader China, Hong Kong stocks Yi’s remarks came just two days ahead of the opening of the China International Import Expo. President Xi – who announced his Star Market idea at last year’s event amid the bruising US-China trade war – is scheduled as the keynote speaker at the opening again. The Star Market for the first time allowed unprofitable companies to float shares. It also has speeded up what traditionally has been arduous and lengthy listing process in China, by using a registration-based initial public offering (IPO) mechanism to facilitate companies’ fundraising. IPO applicants are required to fully publish information about their earnings and operations once they submit their listing documents. If the companies vouch for the truthfulness of their documents, the Shanghai exchange permits them to list. On other mainland boards, IPO candidates looking to raise funds have to pass through a strict review procedure in which the regulator assesses a company’s earnings outlook and growth potential before approval. The Star Market has raised concerns, however, about speculation and overvaluation of unproven companies. One stock shot up 520 per cent at one point before profit taking kicked in. The first 25 Star Market IPO debutants on July 22 are now trading at an average 90 per cent premium to their offering prices. The US-China trade war spilled over to the technology sector this year, and many Chinese companies face the risk of having their supplies cut off by US chip makers and suppliers. The Star Market aims to create China’s own technology powerhouses on par with Apple and Microsoft. For more insights into China tech, sign up for our tech newsletters , subscribe to our Inside China Tech podcast , and download the comprehensive 2019 China Internet Report . Also roam China Tech City , an award-winning interactive digital map at our sister site Abacus .