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, reported Reuters.
Investors piled into the first batch of firms listed on Shenzhen’s tech-focused start-up board under a streamlined system for initial public offerings (IPOs) that made the process less bureaucratic. Trading restrictions were also loosened.
Highlighting investor frenzy, Contec Medical Systems, a maker of medical diagnostic equipment, surged more than 1000% on its first day of trading. Even the smallest gainer jumped 43%.
With more than 800 ChiNext-listed companies trading at roughly 60 times earnings on average, compared with 38 for the Nasdaq, some market watchers warn of bubble risks. “The ChiNext reform is a significant part of China’s grand competition strategy with the United States,” wrote Hao Hong, head of research at BOCOM International.