China’s STAR Market technology board opened trading on the Shanghai Stock Exchange Monday morning, with its first batch of 25 companies offering shares in the long-awaited debut.
Why it matters: Previously known as the science and technology innovation board, STAR Market represents one of China’s most significant capital market reforms. The bourse is a strategic asset in Beijing’s push for technological self-reliance amid the US-China trade war, which has caused several Chinese tech companies to delay or cancel their US initial public offerings (IPO).
- The registration-based tech board was designed to lure high-potential tech companies to list domestically. Currently, top Chinese tech companies, including Alibaba, Tencent, Baidu, and JD.com, are all listed on exchanges overseas because of the strict listing criteria of domestic stock markets.
- The new market is expected to draw listings from among China’s rich reserve of unicorns, privately held companies valued at $1 billion or more, including Bytedance, the highest-valued startup in the world, and ride-hailing giant Didi.
“Establishment of the STAR Market and the pilot registration-based initial public offering system will support China’s innovation-driven economic development and capital market reform.”
—Li Chao, deputy head of the China Securities Regulatory Commission, at the opening ceremony
Details: The STAR Market opened with shares surging for the majority of the 25 companies, which range from semiconductor makers to private spaceflight companies.
- Shanghai-based Anji Microelectronics was among the top performers. Its shares rose as much as 448% an hour after the market opening.
- A new component index, the STAR Market 50 component index, will be released to reflect the overall price performance of listed companies on the new board, according to the Shanghai Stock Exchange.
Context: The new tech board was first announced by Chinese President Xi Jinping in his keynote speech at the opening of the first China International Import Expo in Shanghai last November. The board is an experiment with a registration-based IPO system.
- China’s securities watchdog, the China Securities Regulatory Commission (CSRC), said the new board would focus on companies in high-tech and strategic emerging sectors such as semiconductor, biotech, and new materials.
- The list of high-tech sectors echoes the 10 priority sectors highlighted by Made in China 2025, a government-led industrial program at the center of the contentious US-China trade dispute.