Investors have been enthusiastic about the ability to bet against individual stocks by short selling — a practice forbidden elsewhere in China, and less severe limits on daily price moves than in Shanghai and Shenzhen, where stocks can only move 10 per cent in either direction on normal trading days.
Indeed, companies such as solar cell module maker Anji and chipmaker Montage Technology were up as much as 520 per cent and 285 per cent, respectively, as market participants took full advantage of the fact that the Star board has no limits on share price movements during a stock's first five trading days. Six of the 25 stocks had gains of more than 200 per cent in morning trading, with all stocks up more than 100 per cent.
The towering gains on day one came despite some rules meant to limit the influence of China's retail investors, who account for about 80 per cent of turnover on the Shanghai Stock exchange.
Star requires companies to allocate at least half of their listed stock to mutual, social security, pension and insurance funds, and limits trading to investors with an account balance of at least Rmb500,000 and two years of trading experience.
The gains for new the technology stocks on Star appeared to sap enthusiasm for China's other stocks markets, however, as the Shanghai Composite index fell as much as 1 per cent.
"The new Star board likely caused a liquidity drain in the main board," said Gerry Alfonso, director of Shenwan Hongyuan Securities. Meanwhile the benchmark index in Shenzhen, traditionally the hotspot for tech companies in China, fell 1 per cent.
© The Financial Times Limited 2019
