China's Small-Cap Market Opens for Trading
A new Chinese stock exchange meant to nurture small and high-tech enterprises, modeled on the U.S.-based Nasdaq market, started trading Friday and all 28 listed companies soared in price.
Chengdu Geeya Technology Co., a digital equipment provider, vaulted 210 percent to 35 yuan on the ChiNext exchange in the southern city of Shenzhen. Film studio Huayi Bros. Media Corp. rose 148 percent, while other companies gained by at least 75 percent.
The new board is intended to help smaller Chinese companies in a financial system that has long favored big, state-owned companies. Geeya Technology and most of the other companies on the new exchange are privately owned, while China’s main exchanges in Shanghai and Shenzhen are dominated by government enterprises.
The communist government has talked for more than a decade about creating a Nasdaq-style market to promote technology and other new industries, but its launch was repeatedly delayed.
Beijing hopes the new exchange will “channel resources into competitive emerging industries to nurture new economic growth,” the chairman of the China Securities Regulatory Commission, Shang Fulin, said last week.
Six companies on ChiNext are in biotech or pharmaceuticals and others are in information technology, energy efficiency, telecoms, medical equipment, entertainment and electronics.
The exchange “will help to upgrade industries, serving as a window for the world to know more about the Chinese economy,” said Peng Yunliang, an analyst for Shanghai Securities.
The size of share offerings on ChiNext was small compared with the multibillion-dollar initial public offerings on the main boards in Shanghai and Shenzhen, but analysts said investors would welcome the new opportunities.
Some investors worried ahead of ChiNext’s launch that the flood of new shares might depress other stock prices as money moved to the exchange. But the benchmark Shanghai Composite Index closed up 1.2 percent.
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Associated Press researcher Bonnie Cao in Beijing contributed to this report.
10/30/2009 5:06 AM HONG KONG (AP)