Nine out of the first 25 Chinese firms to list on Shanghai’s Nasdaq-style STAR market announced their share offerings on Tuesday. Investors can sign up tomorrow ahead of the start of trading on July 22.
Why it matters: This is the most offerings announced in a single day in China since June 2015. The new listings could turn around the fortunes of the Shanghai market after a poor first half.
- The nine plan to raise a total RMB18.8 billion ($2.7 billion) in funding.
- China Railway Signal & Communication is looking for RMB10.5 billion, which would be China’s biggest IPO this year.
“Investor enthusiasm seems very strong for these new shares, but if the stock market keeps falling, investors will likely price in some negative sentiment on them.”
Jiang Liangqing, an investment manager at Beijing’s Ruisen Capital Management told Bloomberg.
Details: Four companies have already finished preparing their offerings. The remaining 21 are expected to start taking subscriptions this week.
- Valuations vary. While China Railway Signal & Communication is looking for 18.18 times its 2018 earnings, AMEC, a semiconductor company, will be selling for 170.8 times its 2018 earnings.
Context: The new tech board was announced only eight months ago and Chinese authorities hope it will keep homegrown tech firms from listing abroad, as well as attract foreign companies. To this end, the STAR market will trade under loosened -by Chinese standards- rules, even admitting a loss-making semiconductor firm.
- This year, the Shanghai Composite Index has performed the worst out of all major Asian equity gauges.