Newly-listed firms on China’s ChiNext startup board make stellar debut

Shares of 18 companies surged on their ChiNext debut on Monday, kicking off a historic reform that will see Shenzhen officially challenge Shanghai for tech listings, while adding fuel to a “technology war” with the United States.

Investors piled into the first batch of companies that list on Shenzhen’s tech-focused start-up board under a streamlined system for initial public offerings (IPOs) that will help make the process less bureaucratic. Trading restrictions will also be loosened.

The biggest gainer among them, automotive cable maker Ningbo KBE Electrical Technology Co, jumped more than 500% in morning trading.

But with more than 800 ChiNext-listed companies trading at roughly 60 times earnings on average – compared with 38 for Nasdaq – some market watchers warn of bubble risks.

“The ChiNext reform is a significant part of China’s grand competition strategy with the U.S.,” wrote Hao Hong, head of research at BOCOM International.

But describing ChinNext as “a venue for speculation,” Hong said that “falling stock prices, instead of rising, should be the sign of whether such market reform is successful”.

China’s top securities regulator Yi Huiman reiterated on Monday that regulators will have “zero tolerance” toward market misbehaviors, but will not interfere with normal trading activities.

The 18 companies listed on Monday also include Contec Medical Systems Co, which jumped nearly 500% in morning trading, and Chengdu Dahongli Machinery Co, which was up about 200%.

Based on Shanghai’s year-old STAR Market, the broadening IPO reform will help strengthen the appeal of China’s capital markets at a time when Chinese tech firms face growing U.S. scrutiny and risk of being delisted from U.S. markets.

Abrahman Zhang, chairman of Shenzhen China Europe Capital Co, said the IPO reform benefited Chinese venture capitalists, who are finding it easier to raise tech-focused funds, and exit their investments via listings.

“Top policymakers are recognising that venture capitalists help boost productivity, rather than seek arbitrage,” Zhang said.

“One concern is that too much hot money is now chasing a limited number of quality companies in China.”

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.