China and Hong Kong stocks recovered on Tuesday as investors shifted their focus back to the main boards and away from Shanghai’s new STAR technology board, which had seen jaw-dropping gains before speculators took their profits and ran. The Shanghai Composite – which fell 1.3 per cent to a one-month low on Monday amid the stampede to the Nasdaq-style STAR board – rose 0.5 per cent to close at 2,899.94. The Shenzhen Component Index added 0.6 per cent to 9,175.83. The ChiNext Index of Shenzhen-listed start-ups jumped 1.3 per cent to 1,534.93. In Hong Kong, the Hang Seng Index recouped early losses to trade 0.3 per cent higher to 28,466.48. Monday’s high-fliers on the new STAR board saw gains as high as 521 per cent at one point. But Tuesday was a different story, with all but four suffering big drops. China Railway Signal & Communication, which specialises in train control systems, led the declines, with a 18 per cent loss to 10.1 yuan. Transaction volume in the 25 stocks listed on STAR stood at 20 billion yuan (US$2.9 billion), a decided drop from the 49 billion yuan achieved on Monday. Turnover in Shanghai and Shenzhen reached 323 billion yuan in total. "[The STAR board] is just like a gambling casino, because the share prices stretch up a lot. Everyone is trying to make short-term profits,” said Castor Pang Wai-sun, head researcher at brokerage Core Pacific-Yamaichi. Star Market, a ‘breakthrough in 30-year history of China’s stock market’, gets off to shining start as all debutants see share prices soar Stanley Chan, research director at Emperor Securities, agreed that there is likely to be dramatic volatility in the first few days of trading. “The market needs time to get used to the fresh trading rules and the valuation levels of the stocks,” he said. The board was the brainchild of Xi Jinping, who wanted to give a boost to home-grown tech start-ups. Unlike China’s regular boards, where IPOs are limited to a gain of 44 per cent on opening day and then are controlled by the up or down 10 per cent limit for all stocks, the STAR stocks can essentially go up as high as investors are willing to send them for five days. With speculation rife in China’s comparatively young markets, the difference in potential spectacular profits partly explains the Monday rush. But some analysts are already questioning the high valuations of the pioneer stocks on the board, and raising red flags about potential losses. Currently, northbound traders cannot invest in the STAR board, but Charles Li Xiaojia, chief executive of Hong Kong’s stock exchange operator, has been pushing for the inclusion of the board in the Stock Connect programme. Listed Hong Kong retailers feel the pinch as trade war, protests weigh on sales In Hong Kong, mainland Chinese property developers fell broadly against the upward market, after media reported the government is cracking down on violations in their financing activities. The Chinese banking regulator will launch special inspections of 75 banks in 30 cities later year, as it intensifies the scrutiny on lending to property developers to contain market speculation, Chinese financial media Caixin reported. Sunac China Holdings, the fourth-largest developer in China, lost 2.5 per cent to HK$37.2. China Evergrande Groudeclined 2.3 per cent to HK$21.3, and Country Garden Holdings fell 2.2 per cent to HK$10.9. Seazen Holdings plunged by the 10 per cent maximum limit to 26.73 yuan in Shanghai, while its Hong Kong-listed sibling Future Land Development fell 11.3 per cent to HK$6.75 in Hong Kong, after the company said it is exploring to sell its stakes in about 40 development projects “to actively respond to market changes”. The eighth-largest property developer in China is still reeling from the shock wave of the arrest of its founder and controlling shareholder Wang Zhenhua over allegations that he molested a nine-year-old girl. Since Wang’s arrest on July 1, the company’s A shares have sunk by 54 per cent. Chinese builder Future Land puts 40 projects up for sale after former chair Wang Zhenhua charged with child sex abuse Smartphone and home appliance maker Xiaomi Corp rose 1.3 per cent to HK$9.07, after the company awarded each of its more than 20,538 employees and core contractors 1,000 shares. While the decision was announced in a stock exchange filing on Friday evening, Xiaomi's founder and chief executive Lei Jun said in an internal letter on Monday that the shares were a gift to the employees as the company made it into the latest Fortune Global 500 list. The awarded shares represent about 0.1 per cent of the company's total shares, according to the filing.