Star Market technology board second only to Nasdaq, leads Hong Kong in terms of funds raised amid Chinese stock market euphoria
- The launch of the Star Market, a pet project of President Xi Jinping, a year ago marked the start of China’s stock market reforms
- Bourse operator has fast-tracked listings of chip makers, biotech firms on Star Market to show support, Atta Capital’s Li says
Fundraising on China’s Star Market in Shanghai has rocketed, taking the fledgling technology board into second place globally so far this year in terms of funds raised.
The exchange, also known as the Technology and Innovation Board, is just ahead of Hong Kong and trails only the Nasdaq, after market euphoria in China this month has sent stocks soaring.
The Star Market, the brainchild of President Xi Jinping that will celebrate its anniversary on July 22, saw proceeds raised from initial public offerings and secondary listings this year climb to US$14.1 billion through 66 deals, Refinitiv data shows.
That puts it behind only the Nasdaq stock exchange in New York, where US$18 billion has been raised through 60 deals. In Hong Kong, 67 companies have raised a combined US$13.8 billion on the main board so far, according to the data.
“The recent rally in China’s stock market lifted investors’ sentiment, while the Star Market also drew some listings away from the main board,” said Alan Li, portfolio manager at Atta Capital. “The listing requirements are much looser, and the process is also quicker.”
The launch of the Star Market represented the start of China’s long-anticipated stock market reforms. It adopted a registration-based IPO system, a more market-driven approach that expanded to the ChiNext board of start-ups in Shenzhen recently. It also allowed loss-making companies to be listed.
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Booming fundraising activities on the Star Market contributed to a trading frenzy that has dominated the onshore A-share market over the past two weeks, pushing the Shanghai Composite Index up 13 per cent since the start of this month.
The sudden upswing in market mood also coincided with an influx of foreign capital through the Stock Connect programme that links the onshore market with Hong Kong, as global fund managers sought returns in China amid diminishing global interest rates, a result of historic monetary easing by central banks from the US to Europe.
The Chinese bourse operator also fast-tracked the Star Market listing process for semiconductor firms and biotech companies recently, in a move to support the growth of domestic industries seen as strategically important to the nation, according to Li.
The Star Board’s ascend was aided by the huge secondary listing of Semiconductor Manufacturing International Corp (SMIC), China’s top chip maker which already traded in Hong Kong.
The company raised 46.3 billion yuan (US$6.6 billion) in proceeds in China’s largest share sale in a decade. That could be boosted to 53.2 billion if an overallotment option is fully exercised after its secondary shares are listed on Thursday.
The Shanghai Stock Exchange gave the green light to SMIC’s listing only 19 days after it filed the application, a record for an IPO in a country known for its approval process that can drag on for several years.
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On Wednesday, CanSino Biologics, whose Ad5-nCov was the first Covid-19 vaccine in China to move into human testing, received approval from the China Securities Regulatory Commission (CSRC) to float 24.8 million shares on the Star Market.
The Hong Kong-listed biotech firm, which has yet to begin price consultation for the A shares, could raise about US$700 million based on its Hong Kong closing price of HK$242.6 on Wednesday.
A number of other Hong Kong-listed companies have expressed interest in a secondary listing on the Star Market, including Chinese carmaker Geely Automobile Holdings and drug maker CSPC Pharmaceutical Group.
