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Tuesday, July 23, 2019, 23:43
STAR, HK bourses rival, but also complement each other
By Dai Kaiyi
Tuesday, July 23, 2019, 23:43 By Dai Kaiyi

Shanghai announced the setting up of a high-tech company incubator to provide more policy and financial support to early-stage startups that could list on the new STAR Market in the near term. (PHOTO PROVIDED TO CHINA DAILY)

STAR market, China’s new Nasdaq-style stock board, could be a formidable rival to Hong Kong’s equity market as more technology companies would shift their attention to Shanghai’s new venue as potential location for floatation instead of the bourse in the SAR.

It all depends on how investors look at it, according to Linus Yip Sheung-chi, chief strategist at First Shanghai Securities, who added that the flip side of it is that the two bourses could also be complementary to each other.

The science-technology innovation, dubbed the STAR market, kicked off to much fanfare on Monday. Its roaring debut, partly driven by unlimited price fluctuation, has seen the prices of its initial batch of 25 companies jumping by an average of 140 percent.

It all depends on how investors look at it ... the flip side of it is that the two bourses (STAR market and HK's equity market) could also be complementary to each other.

Linus Yip Sheung-chi

chief strategist at First Shanghai Securities

Chipmaker Anji Microelectronics Technology, which surged as much as 520 percent from its IPO price in morning trading, before retreating with a gain of 400 percent to 196 yuan ($28.5) per share at the closing bell.

The first day’s frenzy was so coveted that, on Tuesday, all but four companies of the 25 stocks listed on the market decline as investors took profits from skyrocketing surges from the debut.

Meanwhile, Hong Kong stocks, trading in a paltry volume, eked out gains on Tuesday after tumbling by 1.37 percent one day before.

Hang Seng Index, the city’s equity benchmark, edged up by 0.34 percent, or 95 points, to close at 28466 points, with a meagre HK$58.8 billion trading volume.

Many of the small-sized unicorns and startups would prefer to list on the STAR market as they are usually offered with a higher valuations in Shanghai compared to that in Hong Kong, according to Dickie Wong Tak-kei, executive director of research at Kingston Securities.

Several previous IPO setbacks have dampened the city’s prospect as one of the world’s more vibrant fundraising hub with robust IPO pipeline.

Among the hitches was Anheuser-Busch InBev, who earlier has scrapped what could have been the largest global initial public offering of 2019 in Hong Kong.

Wong anticipated that the city’s major stock gauge would fluctuate between the range of 28,000 and 29,000 points in at least the future two weeks.


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