10 stocks surge Beijing Stock Exchange kicks off trading on the Beijing Stock Exchange.
SHANGHAI Reuters trading started on Monday with shares of 10 companies that recently conducted initial public offerings IPOs on the Chinese bourse surging as much as six-fold and triggering circuit breakers.
A total of 81 stocks started trading at www.reuters. The article china-exchange IDUSL 1 N 2 S 30 M 3 was set up to help small and medium-sized enterprises https://www.reuters.com com article US-china stocks-exchange idUSKBN 2 HK 0 E 7 SMEs underpinning President Xi Jinping's common prosperity policy aimed at reducing wealth gaps in the country.
It's a good performance for the first day. Yang Hongxun, an analyst at Shenguang's investment consultancy, said I don't see a lot of froth. With President Xi backing the exchange, I think there is little chance that this market will fail. Performance for the other 71 stocks was mixed, which were transferred from the'select tier' of Beijing's over-the- counter New Third Board to the new bourse.
Yi Huiman, chairman of the China Securities Regulatory Commission CSRC, said the launch of the Beijing exchange is a landmark in China's capital market reforms. It is significant as it will improve multi-layered capital market, improve financing system for SMEs and improve China's economy.
The Beijing exchange is a complement to existing bourses in Shanghai and Shenzhen that host companies with bigger market capitalisations.
More than 4 million investors have opened accounts to trade on the Beijing Stock Exchange, which adopts a registration-based IPO mechanism, a system that is also embraced by Shenzhen's ChiNext and Shanghai's tech-focused STAR Market.
The first batch of companies listed on the bourse are mainly from sectors such as software, pharmaceutical and high-end manufacturing.
The 10 stocks that were approved for listing were the most of the buyers who bought them. The listing for the other stocks was long expected, so had been largely priced in.
Henan Tongxin Transmission Co, which makes automobile transmission devises, made the biggest gain, surging 504% in morning trade, according to data from Oriental Securities.
Nantong Great Electric Co Ltd nearly quadrupled, while HeBei Raisesun Information Technology Co gained 280%.
The circuit breakers caused temporary halts in the trading of the 10 stocks.
The exchange has no limits on the maximum daily movement of these 10 stocks on their first day of trading, but moves will be capped at 30% in either direction after that.
The rally's success depends on the fundamentals of the companies, analysts said.
The 81 companies had an average earnings multiple of 36 ahead of their debut, according to the official Securities Times.
It compares to the price earning ratios of 71.84 for Shanghai's STAR Market and 60 for Shenzhen's ChinNext.
The newspaper said that the median net profit growth of the 81 companies listed on the new exchange is 18.99%, or nearly 10 percentage points more than Chinese onshore stocks on average.
The Beijing Stock Exchange has a threshold on par with the STAR Market and investors with assets worth at least 500,000 yuan $78,347 in their stock account.
More cash is expected to flow in.
Eight mutual funds targeting the Beijing exchange have completed registration, according to the CSRC.