Posted on 11/03/2009 2:14:02 AM PST by bruinbirdman
ChiNext, China’s long-awaited Nasdaq-style stock exchange, opened on Friday with frenzied trading that more than doubled the prices of all 28 newly listed companies.
Investors piled into the fledging market in the hope that its technology and innovation-driven start-ups would become future heavyweights. But some experts were sceptical.
“There’s a lot of belief that somehow the next Microsoft is lurking in there, which you’d be a fool to believe,” said Fraser Howie, author of Privatizing China: Inside China’s Stock Markets.
One of the most popular stocks was Huayi Brothers Media, the movie maker famed for putting kung fu stars Jet Li and Jackie Chan in the same film. It soared 148 per cent above its flotation price.
The rest of the companies, ranging from software to robot designers, made similar gains, led by Chengdu Geeya Technology, a maker of digital television equipment, which more than tripled in value.
Analysts said the spectacular moves were the result of demand from retail investors for “new and funky” investments swamping the small number of shares available.
As China has a history of frothy stock market debuts, the explosive price rises did little to surprise analysts or officials.
Shang Fulin, chairman of the China Securities Regulatory Commission, last week cautioned investors that the start-up board “faces relatively higher risks of irrational and speculative trading and market manipulation”.
Beijing introduced ChiNext to provide a route for cash-starved small and medium-sized companies to raise funds. These companies have enjoyed little access to the flood of bank lending that has been available to larger and state-owned enterprises since the beginning of this year.
The 28 companies on the board all completed IPOs in the past month, raising a combined Rmb15.5bn ($2.3bn).
Their owners are likely to have mixed emotions about yesterday’s surges as it suggests they could have sold equity for as much as double or triple the price.
Ping!
What is this “history of frothy stock market debuts” mean? I couldn’t find a lot of info on this, but it looks ominous, intriguing, or boring depending on the history behind it.
Another American export!
Corruption and con-man-ship!!
If you think about it this way, then it makes sense.
It’s not about a stock market opening up in China.
It’s about the bankers and money masters moving their operations from the west to the east.
There is no more profit to be made here. They overloaded us with almost infinite debt and took us by the short hairs.
They can catch their respite in China for a while. However, their deeds in U.S. already poisoned Chinese prospect as well. Globalization did not work out the way they exactly wanted. They made the entire world shoulder the risk from U.S. financial market and confident that it made the U.S. market risk-proof, they mindlessly overleveraged themselves. Now even the whole world cannot absorb such an astronomical fallout.
Good summary.
God help us if we are past the point of no return.
Frothy markets are overpriced, unstable, and prone to collapse. China loves to gamble.
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