Star Market, Xi Jinping’s US$376 billion baby, is poised for Ant Group boost as it turns one
- The tech stock-heavy Star Market has become Asia’s largest such market by value
- More than 130 companies have raised 205 billion yuan in capital over the past year, 34 per cent more than originally targeted
As far as first birthdays go, few would compare with the progress China’s version of Nasdaq has made in its first 12 months.
Ordered into existence by Chinese President Xi Jinping in November 2018, and launched less than eight months later, the technology stock-heavy Star Market has become Asia’s largest such market by value – as of Tuesday, it was capitalised at 2.62 trillion yuan (US$375.9 billion).
More than 130 companies have raised 205 billion yuan in capital over the past year, 34 per cent more than originally targeted. The first batch of 25 companies that made their trading debuts on July 22, 2019, are currently trading at 133 times their earnings.
Beijing launched the Star Market at a time when US-China relations had worsened, with the Trump administration trying again and again to curb China’s ascendancy in the field of technology. The threat of mainland Chinese companies being cut off from American components and networks loomed large. This prompted China to develop its own key technology sector and launch the Star Market to ease funding for such companies.
“We feel that after accessing the Star Market our development prospects have broadened. It urges us to improve company earnings to support our lofty valuation and to meet our investors’ expectations,” said Yin Zhiyao, the founder and chief executive of chip maker Amec, which was among the first batch of 25 companies to list on the technology board.
The big fundraising sizes and high market value reflect the important role and growing popularity of the market, said Wang Feng, chairman of Shanghai-based financial services company Ye Lang Capital. “Over the next three to five years, investors hope to see the rise of China’s own Intel and Apple through the funding support of the Star Market,” he added.
The Star Market – officially the Shanghai Stock Exchange Science and Technology Innovation Board – is poised to receive quite the birthday present. Jack Ma’s Ant Group, which operates the Alipay online payments platform for Alibaba Group Holding, the world’s largest e-commerce company and South China Morning Post parent, will split its massive initial public offering between Star Market and the Hong Kong stock exchange. The listing is widely expected to be among the largest in history.