Breakingviews | China’s wannabe Nasdaq

Considered view

30 Oct 2009 09:23

Small and imperfectly formed

By John Foley

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Context News

Chinext, the stock market for Chinese growth companies, opened for business on October 30, and all stocks at least doubled during the first half-day of trading. Of the 28 companies listed, 10 closed at more than double their issue price. The board raised Rmb15bn ($2.2bn) for participants.

The companies listed on the Shenzhen-based growth market included high-tech businesses, pharmaceuticals, industrial machinery, outdoor products and a film production house. Among the biggest, Beijing Ultrapower Software raised $268m, Huayi Brothers Media raised $176m, and Lepu Medical Technology raised $174m.

A new market for growth stocks should in theory promote innovation and help move China’s capital from where it’s hoarded to where it’s needed. But in practice, Chinext has opened as a chaotic hive of overvaluation. It looks a step too far, too soon.

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