Star Market, China’s Nasdaq-like tech stock exchange, starts trading

published 25 July 2019

"So, you want to quintuple your money in a day?" asks Lex in the Financial Times. Investors in one newly listed Chinese firm got just that. Shares in Anji Microelectronics surged by 520% on the first day of trading on Shanghai's new technology-focused exchange. Billed as China's answer to America's Nasdaq, shares on the "Star Market" rose by an average of 140% last Monday.

With the US turning the screws on the likes of Huawei, Beijing wants to show it can nurture its own technology ecosystem without American input, says James Cook in The Daily Telegraph. The Chinese government hopes that the new market will "encourage investment in domestic technology firms" and give mainland innovators "an alternative way to float" that bypasses rival markets in New York and Hong Kong.

The new board is supposed to underscore "a profound shift in China's securities sector", writes Daniel Ren for the South China Morning Post. Yet it is clearly as subject to momentum trading as the main bourse. Extreme volatility is the norm on a stockmarket where trend-following retail investors comprise 80% of turnover. The frenetic trading means that most foreign investors are steering clear of the new exchange, which lacks a link-up with Hong Kong, says Lex. Meanwhile, there are plenty of unprofitable start-ups queuing up to list. But will the Star Market be able to "drag some top tech names on board"?

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.